I majored in history in college… some would say that was a waste of time. I’ve certainly agreed with that sentiment a time or two. I knew I didn’t want to teach, and after a while the idea of a career in academia or museum curating seemed absolutely dreadful. That didn’t change the fact that I loved history. It was a story to me, a million stories, a trillion stories! It was humanity through the ages, it was everyday life from an infinite variation of days. I’ve been hooked ever since I was a kid.
I guess you could say I majored in history in life, because it’s a big part of who I am. The number one skill I got out of college was the ability to read long, boring documents thoroughly. This has made me a better salesman when it comes to knowing technical details, and a better investor because I can read through those quarterly reports without flinching too much (I still need a cup of coffee to really peel through). Hell, it even comes up in my improv comedy…I’ve done way too many viking scenes…
Directly relating to investing, history is the story of humanity. And humanity spends a lot of its time surviving. Sure, we do other things. We read and we write, we share and build communities, paint pictures and build castles. What we do is endless… but that all starts with having something to eat and something to drink and a place to rest our heads. In those stories of humanity, one can see that much of that story at its base is economics. If you understand those fundamentals, you can have a better idea of where to put your money so that it grows.
Speculative opportunities become available when things are out of whack. When you see something that is so unbelievably wrong, uneconomic, and historically inaccurate…something that just does not add up, it is worth looking into… $10 barrels of oil in 1999? Are you kidding me? Anyone who knew the story of American industrialization knew that China’s rise was going to be that experience but on steroids. The template already existed and there are a lot more people in China then in the U.S… so when Morgan Stanley closed its commodities trading division, a perceptive investor/history buff could have stepped up to the plate and said, “WOW THERE, BUDDY…” and bought up a ton of cheap oil. We’ve all seen what direction those prices have gone in over the last 14 years.
Unfortunately, I was 9 at the time and not quite perceptive enough… but that example is a lesson for me and other investors. A bit of historical knowledge can go a long way when you’re looking at markets.
If you have any thoughts on this, please feel free to comment!
The Feral Financier