The Psychology of Money by Morgan Housel

Author:Morgan Housel
Language: eng
Format: epub
Publisher: Harriman House
Published: 2020-06-09T15:27:18+00:00

There was no such thing as venture capital. An aspiring young entrepreneur had very few places to turn, and those places were all guarded by risk-averse gatekeepers with zero imagination. In other words, bankers.

What this means, in effect, is that all historical data going back just a few decades about how startups are financed is out of date. What we know about investment cycles and startup failure rates is not a deep base of history to learn from, because the way companies are funded today is such a new historical paradigm.

Or take public markets. The S&P 500 did not include financial stocks until 1976; today, financials make up 16% of the index. Technology stocks were virtually nonexistent 50 years ago. Today, they’re more than a fifth of the index. Accounting rules have changed over time. So have disclosures, auditing, and the amount of market liquidity. Things changed.

The time between U.S. recessions has changed dramatically over the last 150 years:

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