by Shawn Langlois
‘They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.’
That’s a quote from Warren Buffett’s letter to shareholders way back in 2000, but it resurfaced on Reddit on Sunday, with investors comparing it to the current stock market environment.
At the time, the Berkshire Hathaway chairman was comparing those cashing in during the frenzy of the dot-com bubble to Cinderella at the ball.
“The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs,” Buffett wrote in the letter. “Nothing sedates rationality like large doses of effortless money.”