This Time is …

There’s a saying that the four most dangerous words in investing are, This time is different.

This upswing will go on forever. This crash will take us all the way to zero (and we’ll never recover!). This time, in other words, is somehow different.

The reason this sentence (or idea) causes so much trouble is because each time — each crisis, each downturn, each move, each job, each child — is importantly different from all the others, and in other ways also importantly the same.

The challenge, then, is clear. We have to apply the historical method to each time — to get really, really clear about what’s the same and what’s different about this time, really.

In their great handbook on the lessons of history for policymakers, Thinking in Time, the historians Richard Neustadt and Ernest May suggest making a simple T-chart of “likenesses and differences” between any given situation and the parallels or possible analogues by which we reason. For the idea that most often leads policymakers into temptation and trouble is the idea that this one is just like that one — another Pearl Harbor, Great Crash, 9/11, Spanish flu, and on and on.

[Notice how often sensationalists in politics, business, and media will insist that this time is either completely different from or completely the same as some other time. It’s almost always worth discounting or discarding those extreme positions outright.]

So, what is this time, really? I hope we can all agree by now that nobody really knows. But lots of people have important puzzle pieces — lessons from history, carefully contextualized; or evolving research straight from the cutting edge of now.

We’re living through history, without question. The interesting questions are about which lessons we might lean on, and which we might learn. Viewed from afar, what will this time rhyme with?