An intelligent investor studies enough history and understands enough about the economy to know that history does repeat itself. The Economist has written this article to show how it is different this time around -- but as I read this concise and informative article, I am drawn to the fact that things aren't very different after all.
Sure the bear market this time around, got the double shock of commodity prices and credit freeze, but some market fundamentals are still the same. To name a few; human greed, speculative nature of traders, and short term focus are still strong as ever, if not much worse.
As an intelligent investor, it is important to note all these factors and understand them, but not let them directly affect your decision to buy or sell any business. The macro knowledge must only be used as a guide to understand how businesses function and can be affected. An intelligent investor never tries to play the prediction game and place bets on expected the future trends -- no matter how educated those guesses are. There is enough ink spilled daily by various experts who predict the market for a living. If they were always making correct predictions, market would actually be efficient and all securities would always be efficiently priced. Reality is evidence to the contrary.
The only criterion for an investment must be valuation, and nothing else. This must be true at all times -- boom or bust.
