J.P. Morgan on the fear of missing out

Nothing so undermines your financial judgment as the sight or your neighbor getting rich.

~ J.P. Morgan, following the Panic of 1907

Bill Miller on fear and greed

One of the things that we know - it's been proven over and over again - is that the coefficient of loss-to-gain is 2-to-1.  So a dollar's worth of loss in the market is twice as painful as a dollar's worth of gain is pleasurable.  And, as Warren Buffett often says, "fear is contagious and spreads rapidly, and confidence only returns slowly, one person at a time."  But what that means is that when you have very dramatic events that people tend to overreact to them and that those are rare, but they're perfect buying opportunities.

~ Bill Miller, interview with Consuelo Mack, January 11, 2022

Charles Mackay on the South Sea bubble

Nobody seemed to imagine that the nation itself was as culpable as the South Sea Company.  Nobody blamed the credulity and avarice of the people — the degrading lust of gain... or the infatuation which had made the multitude run their heads with such frantic eagerness into the net held out for them by scheming projectors.  These things were never mentioned. 

~ Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds

Glenn Greenwald on Reddit traders vowing to drive GameStop stock up to $1,000

It has also enriched a lot of people who bought at $20 or even $30 or $40 or $100, and the stock is now at $350 with no sign of it going down because they're vowing to hold onto the stock and even drive it up to $1,000 a share.  That's the vow on Reddit.  We'll see if that happens or not. 

~ Glenn Greenwald, "The Reddit Revolution, GameStop and Melvin Capital," 15:40 mark, January 28, 2021

Mark Hulbert on market sentiment, index funds, and market timers

One indication that we’re a lot closer to the greed end of the spectrum comes from the widespread popularity today of buying and holding index funds. Judging by the 200 newsletters I monitor, market timers are struggling. It’s a good bet that just the opposite will be true at the bottom of the next bear market.

~ Mark Hulbert, "How the 1% at Davos make the same mistakes as we do about stocks and the economy," MarketWatch.com, January 10, 2020

Per Byland on greed

If people's greed is a problem, then what would be a solution?

1. Institute a system of power that greedy people can and will take over
2. Preach that a new, ungreedy man will soon be born
3. Dismantle/decentralize power such that greedy people can only get rich by serving others

~ Per Bylund, Twitter post, November 22, 2019

Joseph Sobran on greed and the state

The state is never accused of greed.  There is no limit to what it may take from us. And those who live on what is taken in taxes are never accused of greed either.  Greed is virtually identified with the "profit motive." We have no invidious term for the parasitic motive.  The state and its clients are all but immune from moral criticism.

~ Joseph Sobran, "The Two Economies," The Free Market, January 1991

Thomas Sowell on greed

I have never understood why it is "greed" to want to keep what you've earned, but not greed to want to take somebody else's money.

~ Thomas Sowell

Sheldon Richman on greed, moral hazard, and financial regulation

Greedy people by definition want more not less. So they will be as concerned to hold on to what they have as they will be to increase their wealth. Risky investment is a way to get more but also a way to end up with less. Greed, therefore, will tend to restrain recklessness if people know their profits and losses belong to them. The corollary is that the restraints on recklessness will be weakened to the extent that people expect the losses to be absorbed by others. Market discipline is the key.

... As Gerald P. O’Driscoll Jr.writes, “Deposit insurance, access to the Fed’s lending, and the implicit (now explicit) government guarantee for banks ‘too big to fail’ all constituted a system of financial corporatism.” What these interventions have in common is the potential to shift losses forcibly from those who should be responsible for them to someone else—making reckless behavior and losses more likely than they would be. That’s the definition of moral hazard.

Greed is an easy target. But blaming greed gets us nowhere. As Lawrence White says, it’s like blaming gravity for a plane crash. It certainly doesn’t suggest any sensible policy response. The religion professor said we need more regulation. But if people are greedy, how do more regulators promise to improve matters? They are people too.

If we can’t trust people with freedom, how can we trust them with power?

~ Sheldon Richman, "The Goal Is Freedom: All About Greed ," Foundation For Economic Education, February 27, 2009

Sean Corrigan: Dot-com speculators should look in the mirror

What never ceases to amaze, is people’s prodigious ability to indulge in a little cognitive dissonance when they think it will make them rich.

For several years past a coterie of solid, sceptical writers and contrarian investors have been cogently pulling apart matters like GM’s wild pension fund assumptions, GE’s earnings smoothing from its unregulated, quasi-banking arm at GE Capital, Cisco’s aggressive use of pooling, Intel’s Dot.Com ‘investment’ gains, Microsoft’s stock options scheme, Dell’s aggressive use of put options to pad the income statement, a host of senior Execs’ avoidance of full regulatory filing by the use of total return swaps and non-recourse loans to cash in their options grants, IBM’s ability to achieve double digit earnings growth with barely changed revenues – and more besides.

But ain’t it funny how nobody listened to any of this when stocks were going up 5% a day just 'cos Battapaglia & Blodgett, Abbey & Acampora, and Glassman & Greenspan were egging the mug punters on to believe in the New Paradigm?

Oh, those bandits in the boardrooms, those shyster lawyers, those crooked accountants and devious wildcat bankers, that energy regulation-killing Rubin, that options-expense scotching Liebermann, that money-pumping, cheerleading Fed Chairman – why could they not just continue with the game just a little longer so I could have got mine out before the House of Cards came tumbling down!

I’m sorry, people! Most of you were warned, you just chose not to heed it, so, when you start moralizing about ‘Infectious Greed’, just remember to look in the mirror when you mouth the words.

~ Sean Corrigan, "Take It Like a Man," LewRockwell.com, July 24, 2002

Paul Krugman blaming the subprime mess on greed and a lack of corporate governance

'What were they smoking?" asks the cover of the current issue of Fortune magazine. Underneath the headline are photos of recently deposed Wall Street titans, captioned with the staggering sums they managed to lose.

The answer, of course, is that they were high on the usual drug - greed. And they were encouraged to make socially destructive decisions by a system of executive compensation that should have been reformed after the Enron and WorldCom scandals, but wasn't.

The point is that the subprime crisis and the credit crunch are, in an important sense, the result of our failure to effectively reform corporate governance after the last set of scandals.

~ Paul Krugman, "Banks Gone Wild," International Herald Tribune, November 23, 2007

Paul Krugman blames credit crunch on greed and lack of regulation

Around 25 years ago, American business - and the American political system - bought into the idea that greed is good. Executives are lavishly rewarded if the companies they run seem successful: Last year the chief executives of Merrill and Citigroup were paid $48 million and $25.6 million, respectively.

But if the success turns out to have been an illusion - well, they still get to keep the money. Heads they win, tails we lose.

Not only is this grossly unfair, it encourages bad risk-taking and sometimes fraud. If an executive can create the appearance of success, even for a couple of years, he will walk away immensely wealthy. Meanwhile, the subsequent revelation that appearances were deceiving is someone else's problem.

If all this sounds familiar, it should. The huge rewards executives receive if they can fake success are what led to the great corporate scandals of a few years back. There's no indication that any laws were broken this time - but the public's trust was nonetheless betrayed, once again.

The point is that the subprime crisis and the credit crunch are, in an important sense, the result of our failure to effectively reform corporate governance after the last set of scandals.

~ Paul Krugman, "Krugman: Banks Gone Wild," International Herald Tribune, November 23, 2007

Gordon Gekko: "Greed is good"

The point is, ladies and gentlemen, that greed—for lack of a better word—is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms—greed for life, for money, for love, knowledge—has marked the upward surge of mankind. And greed—you mark my words—will not only save Teldar Paper, but that other malfunctioning corporation called the USA.

~ Gordon Gekko (played by Michael Douglas), from the movie Wall Street, released December 11, 1987

(Movie clip)

Kevin Duffy on the private and public sectors

One system is based on voluntarism, the other on coercion. Government is a system of theft, robbing Peter to pay Paul. Little wonder it attracts crooks. Capitalism is a system where the prize goes to those who best serve consumers, while balancing the interests of employees and shareholders. Little wonder it attracts entrepreneurs – risk takers – who are a rare breed. Needless to say, the public sector needs one heck of a spin doctor. It must convince everyone that it “serves the people” and that the private sector is full of greedy bastards at best, thieves and fraud artists at worst. Obviously the PR campaign has worked magically.

Kevin Duffy, Bearing Asset Management, November 5, 2004