Although history does not repeat itself, it does tend to rhyme. Or better yet, “you can observe a lot by watching” as the wise Yogi Berra quipped. However, even though examining the past and trying to gain from the triumphs and – more importantly – the failures of who came before us, one should be alert to the limitations of such exercises.
Predicting the Past
It is for a reason that this section used the plural tense for history. In his book, the Black Swan, Nassim Taleb discusses a thought exercise designed by Aaron Brown and Paul Wilmott:
- Operation 1: The Melting Ice Cube. Imagine an ice cube and consider how it may melt over the next two hours. Try to envision the shape of the resulting puddle.
- Operation 2: Where did the water come from? Consider a puddle of water on the floor. Now try to reconstruct in your mind’s eye the shape of the ice cube it may once have been.
It is apparent that the second operation is much harder. The prior operation is primarily an engineering problem. With sufficient knowledge of the surface and over the volume of the ice cube, one could get a pretty good idea of the resulting puddle. In the backward process, the possible shapes of the preceding ice cube are close to limitless. With that in mind, we should be cautious in our predictions of the past.
Selected Histories in Business and Investing
In this section, you will find articles, thoughts and opinions on topics related to investing, fundamental finance, as well as economic and business history.
Stories of Industries
- A Brief History of Value Investing?
- The Icelandic Stock Exchange at a Glance
- The Most Profitable Industry Ever?
- TCI and the Becoming of the Cable Cowboy
Historic Business Manoeuvres
Seminal Writings on Investing
- NOLs and DTAs at Leucadia National
- Martin Whitman on Value Investing vs. Fundamental Finance
- Buffett on Nebraska Furniture Mart
- Investing in the Unknown and Unknowable by Richard Zeckhauser
- Buffett on the Borsheim Business Model