In the last decade, we've been through five distinct boom and bust periods. Surge, crash, surge, crash, surge.
I asked Art Cashin, a 50-year veteran of the New York Stock Exchange, what the mood has been like on the trading floor during these wild periods. Here's what he had to say (transcript follows):
Morgan Housel: In the past 13 years, we've been through the top of the dot-com bubble in 2000 and then the bottom lows in March 2009 and the financial crisis. What was the mood like on the New York Stock Exchange during those two periods? Was there a sense that this was real or was it obvious that these were tops and bottoms going on? What are the emotions like down there?
Arthur Cashin: Well you know, no one ever quite rings a bell at the top. It would be very convenient and we would all know to just step aside, but you can see some of the excesses going on. With the dot-com bubble, you began to notice that things were just not right. They had a company that sold on the Internet airline tickets. The value of that company soon grew to more than the value of all the airlines combined. Now that made absolutely no sense.
The difficulty is that markets, even when they turn wrong, can remain kind of obstinate about it. As John Maynard Keynes used to say, "The market can remain irrational longer than you can stay solvent," which is very good advice, because as wrong as a market could be, to fight it too early and too long can take every penny you have in your pocket. And there's no satisfaction to wind up being broke, but right later on.