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Transcript - the bubbles of today

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  • 1. The dot.com bubbleThe bubbles of todayNarratorPeople are intrinsically fascinated and excited by the shock of the new, and technologicalrevolutions create a fervour that often leads to a bubble.Martin Wolf‘If we get some huge breakthrough in life sciences, and some company comes forward andsays we’ve got the drug that guarantees that everybody will live for five hundred years, I canassure you that there will be another bubble. Everybody will want to buy the shares ofcompanies like that.’Michael Jackson ‘One of the things that we’re seeing at the moment is the greenbubble. If you come along with a half good green idea, there’s a good chance in technologythat you’d get funded. I suspect that there’s a bit of fad there. A little mini bubble which mightneed looking at.’NarratorThe thought that we can out-guess others or even the market – hubris – plays a part in thecreation of all bubblesJames Montier‘We have these sort of delusions of our own abilities and those really do feed bubbles,because bubbles at heart are all about over-optimism.’Larry Elliot‘People just do assume that they have discovered the one little secret that will actually makewhat went wrong last time, right this time. It’s a bit like a golfer who goes out there and shoots90 but thinks actually, there’s one little thing I do to my swing will turn me into Tiger Woods.And all I really need to do is just tweak a few things and we’ll get things absolutely right. Andthat’s what people think in the markets.’Howard Davies‘I don’t think that you can regulate away optimism and animal spirits, if you like, and that Ithink is almost bound to mean that there will be, from time to time, some over shooting on theupside and some over shooting on the downside.’James Montier‘The four most dangerous words in investing are “This time it’s different” and it never is.’Larry Elliot‘People forget. They know that there has been massive boom bust. They know there havebeen gigantic speculative bubbles. People forget.’James Montier‘If we lived in a perfectly efficient world, or indeed, a massively regulated one, the chancesare that you’d stifle any hope of innovation.So it’s probably just as well we have inefficient markets, because, as always, the inefficiencycreates the opportunity.’Narrator‘It seems that where human nature and money collide – speculation will always exist whetherwe like it or not.’
  • 2. David Llewellyn‘Can I just draw one simple analogy? Take the programme “Strictly Come Dancing”.Now, you might be asked who do you think is the worst dancer? Who do you think should bewithdrawn?Now, if you were asked that question, you will make your own judgment that dancer x is theone that should withdraw.But now let us put the question a different way.Will you bet 10,000 pounds on who you think will be forced to withdraw?Now in that case, because there is money at stake, the decision that you make is not so muchwho you believe should go, but who you believe all the other voters will believe should go,and therefore your bet or your decision is based not on your view but on the view you haveabout everybody else’s view.It’s very complicated.’

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