The Profits of History

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Magila rolled his own cigarettes; they tended to be very little tobacco and a lot of paper.

This morning, this warning notice appeared in the Economist Espresso:

“The purpose of Nebula, which floated yesterday, is, well, nebulous.  It is a ‘blank-cheque company’, raising cash to conduct unspecified future technology deals.  Ventures of this sort raised more than $10bn in 2017, close to the record set in 2007.”

I happen to be reading Galbraith’s “The Great Crash 1929,” about the stock market crash and the conditions that led to it.  This evening on the train, these sections jumped out at me:

“The most notable piece of speculative architecture of the late twenties, and the one by which, more than any other device, the public demand for common stocks was satisfied, was the investment trust or company.  The investment trust did not promote new enterprises or enlarge old ones.  It merely arranged that people could own stock in old companies to the medium of new ones.”

and,

“Confidence in the investment judgment of the managers of the trusts was very high.  To reveal the stocks they were selecting might, it was said, set off a dangerous boom in the securities they favoured.  Historians have told with wonder of one of the promotiosn at the time of the South Sea Bubble.  It was ‘For an Undertaking which shall in due time be revealed.’  The stock is said to have sold exceedingly well.  As promotions the investment trusts were, on the record, most wonderful.  They were undertakings the nature of which was never to be revealed, and their stock also sold exceedingly well.”

Those who don’t remember history may be condemned to repeat it; those who do remember history might profit very well by it.

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