Adam Smith was a strong proponent of free markets and minimal government intervention. His major work The Wealth of Nations, published in 1776, laid the foundations for modern economics.
In an earlier work, The Theory of Moral Sentiments, Smith acknowledged the behavioural fallibility of investors. In his words, opportunities for the patient and objective investor persist as long as:
“… the chance of gain is by every man more or less overvalued, and the chance of loss is by most men undervalued…”
“… the pleasure we are to enjoy ten years hence, interests us so little in comparison with that which we may enjoy today.”
It was Smith who identified that market economy participants pursuing their individual interests collectively achieve the best outcome for society.
His insight into how capital allocation works through the market mechanism is as relevant today as it was in 1776. His inquiring mind, his resilience in the face of opposition and his capacity for innovation were inspirational.