Why the Oldest Guy in the Office Keeps Getting Mad & Saying "This time it's different."

My writing falls into three main categories:

1. How to Create Wealth — One of my biggest passions. I love talking about, learning about, and educating others on the topic.

2. Investing – How to potentially increase the return on investments while respecting the chance of loss of capital.

3. Wealth Is Good — The idea that when you become wealthy (which you may if you make as much money as possible and invest intelligently), the next challenge is figuring out what to do with it.

Today’s post is categorized as ‘Dying in the Herd,’ and it’s about investing.

Dying in the Herd: Why Wall Street Prefers Conventional Failure

There is a quiet rule that governs much of professional investing, though it's rarely stated out loud. It is not about maximizing returns, uncovering truth, or even serving clients particularly well. It is about not being alone when things go wrong. In practice, Wall Street often prefers conventional failure to unconventional success. Investors would rather die in the herd than live prosperously alone.

This instinct explains a remarkable amount of behavior in markets: why portfolios look the same, why innovation is slow to be adopted, why bold ideas are watered down by committees, and why genuinely differentiated performance is so rare. It also explains why some of the most quoted warnings in investing are simultaneously true and dangerously incomplete.

The Famous Warning and the Joke That Follows

One of the most enduring aphorisms in investing is the warning that "this time it's different" are the most dangerous words in investing. The phrase exists for good reason. Across centuries of bubbles, manias, and crashes, investors have repeatedly convinced themselves that old rules no longer apply. Technology, policy, globalization, central banks: each era produces a new justification for abandoning discipline.

But there is a lesser-known follow-up joke that circulates among professionals:

The eleven most dangerous words in investing are: "The four most dangerous words in investing are 'this time it's different.'"

The joke matters because it reveals a deeper truth. Blindly believing that nothing ever changes is just as dangerous as believing that everything has changed. Markets evolve. Structures shift. Incentives change. The hard part is not repeating slogans; it is doing the uncomfortable work of distinguishing between genuine regime change and familiar human behavior wearing a new costume.

Yet most professionals never really attempt that distinction. Not because they are incapable, but because the system does not reward them for trying.

Career Risk vs. Investment Risk

The central tension in professional investing is not risk versus return. It is investment risk versus career risk. Investment risk is the possibility of losing money. Career risk is the possibility of losing your job, reputation, or clients. In theory, professionals are paid to manage the former. In reality, they are governed by the latter.

If a portfolio performs poorly but looks like everyone else's portfolio, explanations are easy. "Markets were down." "Correlations went to one." "No one could have predicted this." Failure is shared, diffuse, and forgivable.

If a portfolio looks different (concentrated, unconventional, or early) and performs poorly, the explanation becomes personal. The manager wasn't unlucky; they were reckless. They didn't follow process. They strayed from consensus. They tried to be clever.

The irony is that this logic holds even when the unconventional approach works. Outperformance that deviates too far from the herd can be just as dangerous as underperformance. It raises uncomfortable questions. Why is this portfolio different? Why didn't we do this earlier? What happens if it stops working?

Success that cannot be easily explained is threatening. Failure that is widely shared is comforting.

Why the Herd Is Rational

From the outside, this behavior looks lazy. From the inside, it is entirely rational.

Most advisors, analysts, and portfolio managers operate inside institutions. Institutions are governed by committees, compliance departments, benchmarks, peer comparisons, and quarterly reviews. These structures are designed to reduce variance, not maximize insight.

In that environment, the optimal strategy is not to be right. It is to be defensible.

Defensibility comes from owning what everyone else owns, using language everyone recognizes, anchoring decisions to benchmarks, and being able to say, "This is what prudent professionals do."

The herd is not a moral failure. It is a survival strategy.

The Myth of Independent Thinking

Wall Street celebrates independence rhetorically and punishes it operationally.

Every firm claims to value original thinking. Very few are willing to tolerate the temporary discomfort that real independence requires. Independent ideas look wrong before they look right. They underperform before they outperform. They require explanation when explanation is least satisfying.

Committees tend to filter ideas not by truth, but by acceptability. The most controversial edges are sanded down. The boldest insights are reframed until they resemble consensus. Over time, portfolios converge, not because the answers are obvious, but because deviation is expensive.

This is why so much capital ends up in what is effectively closet indexing. The appearance of diversification masks the reality of conformity. Everyone is managing the same risks, just with different marketing language.

Why True Outperformance Is Lonely

Historically, sustained outperformance has almost always come from people or organizations that were willing to look wrong and stay wrong longer than others were comfortable with.

They shared a few traits. They controlled their own capital or had unusually patient clients. They were structurally insulated from short-term judgment. They were comfortable being misunderstood. They accepted reputational volatility as the price of financial truth.

This is not a personality quirk. It is a structural requirement.

You cannot outperform the herd while thinking like the herd. And you cannot think differently without accepting separation.

The Real Cost to Clients

The tragedy is not that professionals protect themselves. The tragedy is that clients often believe they are paying for something else.

Clients think they are paying for insight, judgment, experience, and independent thinking. What they often receive instead is benchmark-relative positioning, risk management designed for optics, and portfolios optimized for explanation, not outcomes.

Again, this is not usually malicious. It is the natural result of incentives that reward safety over truth.

Conclusion: Choosing Your Risk

Every investor makes a choice, whether consciously or not.

You can choose the risk of standing apart, accepting discomfort, scrutiny, and temporary regret in pursuit of durable advantage. Or you can choose the risk of the herd, sharing in collective outcomes, good or bad, protected by consensus and convention.

Most professionals choose the latter. Not because they lack courage or intelligence, but because the system teaches them too. But the few who choose the former, who accept that prosperity often requires solitude, are the reason markets remain inefficient at all.

In the end, the most dangerous words in investing are not "this time it's different."

They are: "At least we were wrong together."

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.