Ten men, ten colors. Ten men, ten skills. When the stock price of the South Sea Company started to surge around 1720, Sir Isaac Newton (1643-1727) decided to speculate on this stock as a lot of people in the middle & upper class did. They dreamed to be one-night millionaires telling each other that the British Empire would get more & more prosperous in the future. The 1st trade of the discoverer of the law of the universal gravitation was successful. Feeling well with this success, he raised a stake at the 2nd time, even though the stock was traded in higher prices than when he had sold it. The SSC rallied up for a while, but it suddenly began to plunge into the abyss one day & was decreasing the market value rapidly day by day.
A few centuries later, the Oracle of Omaha, Warren Buffett (b.1930) took notice of this happening. His annual letters to shareholders of Berkshire Hathaway Inc., which he manages, are well reputed to be full of investment tips. He says in a 2005 letter:
A few centuries later, the Oracle of Omaha, Warren Buffett (b.1930) took notice of this happening. His annual letters to shareholders of Berkshire Hathaway Inc., which he manages, are well reputed to be full of investment tips. He says in a 2005 letter:
Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac’s talents didn’t extend to investing. He lost a bundle in the South Sea Bubble, explaining later, “I can calculate the movement of the stars, but not the madness of men.” If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.
