“Whom the God’s would destroy, they first make mad” – Euripides, ancient Greek philosopher


Human nature doesn’t change.
Technology advances exponentially, but the human emotional condition does not.
We as a species still exhibit the emotional strengths and weaknesses of our ancestors and there is no greater written record of it than in tradable markets.
Throughout history, there are lots of records of people trading in and keeping records of commodity prices.
Even in ancient times, these records reflected not only the natural supply and demand fluctuations of the day-to-day business transactions-
But they also captured the psychology of the times of plenty and times of want.
In short, those records are a record of human behavior.
Complacency, fear and greed all show up in the price action, much like it does today.
This brings our discussion to the human emotional flaw of Hubris (excessive pride/self-confidence or arrogance).
If there is one thing that is punished most harshly by Wall Street, it would be hubris.
Being cock-sure of an outcome and betting the farm on the belief can bring disaster to one’s financial wellbeing.
Whether it was the collapse of Long-term Capital Management (which had 2 Nobel laureates and a number of PhDs ) or the quants that sliced and diced mortgages creating financial instruments that were the cause of the 2007-2009 financial crisis, or the wall street wunderkinder of Archegos Capital Management, they all had one thing in common, an excessive amount of hubris.
In the most recent case with Archegos, take a look at the collateral damage done.
Compare the charts of ViacomCBS, Discovery, Baidu, Vipshop, and Tencent.
In the final months before the collapse of Archegos, these stocks all had a steep incline up, and then they all collapsed as quickly as they had risen.
These are chart patterns that should be committed to memory.
The aforementioned all suffered by ignoring the excess of their market operations.
Those that ignore the past, are doomed to learn its lessons.
 
 
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