Prosperity Paranoia Doctrine

“There are three things I know for sure when we are in one of these cycles: 1) This period of euphoria will not last forever (neither I or any other human can accurately predict the end). 2) Humans tend to get sloppy when making money is easy. 3) Bear Stearns will not get caught up in the hysterical optimism and the people at Bear Stearns will not get careless or conceited. It is the job of your executive committee to keep all of our feet on the floor. It is the job of your Executive Committee to see that we maximize the opportunities that we are being handed.”

“Whenever things go too well, I become very suspicious. This is one of those periods. Keep your guard up! Now is the time to be careful. Now is the time the dopes get knocked off. Remember the rules and remember our culture. When business is good, we become careful with our capital and try to cut expenses.”