While some build Castles in the Air,
Directors build ‘em in the Seas;
Subscribers plainly see ‘em there,
For Fools will see as Wise Men please.
- Jonathan Swift

This poem was written in 1720, after a debacle called South Sea Bubble in England when the price of South Sea Company stock moved from 100 pounds a share to 1000 pounds in a year. Most Englishman from peasant to the Lord’s started feverishly investing which lead to new companies going for listing ( IPO’s in our language today) including one company that wanted to raise money for “ carrying out an undertaking for great advantage but nobody to know what it is “.

While one may laugh at this – the current banking crisis shows that these are no laughing matters for the person who lost money. In the South Sea Bubble mentioned above Sir Isaac Newton - one of the greatest minds of all times - reportedly lost money and remarked ”I can calculate the movement of the stars, but not the madness of men"

An investor’s first and last job is to follow Warren Buffet’s famous investment rule given below:

Rule No 1: Never lose money & Rule No 2: Always follow Rule No 1.

It is funny that nearly 300 years later we still have scams erupting now and then, like the banking crisis of 2008, the dot com of 2000 and so on. What this means for small investor is never to fall for hype, always be cautious and stay away from herd mentality as much as possible. This is not the road that many take, they follow the road of falling for what their neighbor is buying or get lured by some snazzy advertisement of high returns.