Wanting to play the stock market is not just smart! Isaac Newton is an example of that.
We all admit that the great physicist Isaac Newton was one of the most intelligent people in human history. However, despite being the father of many famous laws that have plagued physics lovers up to this point, Newton was painful to realize that: being intelligent does not mean that he will know his head. smart private.
Newton – a familiar face of the scientific world.
In a commentary and supplement to Benjamin Graham’s classic book, “The Intelligent Investor,” Wall Street editor Jason Zweig tells an anecdote about Newton’s investment in South Company. Sea.
“In the spring of 1720, Sir Isaac Newton invested in the South Sea, then one of the most valuable stock companies in England. But after things spiraled out of control, the brilliant physicist must have mumbled that he “can calculate the movement of the body, but not the madness of man”.
Humans are truly unpredictable.
“Newton sold shares of South Sea, for a 100% profit worth a total of 7000 euros. But then, swept up in the wave of the market, he returned with a much more investment, and then had to swallow bitterly when the loss reached 20,000 euros (worth more than 3 million USD at the time of 2002-2003)”.
For the rest of his life, he even forbade anyone to mention the word ” South Sea” in front of him.
Chart of the development of the South Sea at that time.
The collapse of the South Sea has even been recorded in history, with the event name being the “South Sea bubble” absurd levels. At a point when no one can buy anymore, the bubble burst and it all collapsed).
You see, Newton was by no means an unintelligent person. He invented the differential and introduced the concept of the three laws of motion. But through this, we can see that he is not a smart investor, when he let his emotions interfere with his peak intellect, and of course was crushed by the chaos of the market.
Newton could calculate the motion of the body, but not the madness of man.
Or it can be summed up like Graham: “Ultimately, an investor’s biggest problem and biggest enemy is himself.”