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What did John Templeton mean when he said that the four most dangerous words in investing are: ‘this time it’s different'?
It's a statement that seems to be true about our tendency to believe we won't make the same mistake twice, even though we do, and that somehow what's occurring in the present is completely different, even when the underlying fundamentals of the situation may be nearly identical.  It's a form of self-delusion and, sometimes, mass-delusion, and it has been a major contributing factor to many of our worst financial disasters. If you look at every housing bubble, for instance, we examine the aftermath, put new regulations and procedures into place, theoretically to prevent it from happening again, and then move forward.  When the cycle starts to repeat itself, we ignore the signals, telling ourselves, "oh, that can't happen again -- this time it's different." When investors begin to ignore the warning signs because they think the current situation is somehow totally different and therefore there will be a different outcome than the last disaster, that's when things actually do go bad. The 2008 housing crisis was caused by the same essential forces that brought about similar (albeit smaller scale) housing disasters in the 80's and 90's -- greed caused banks and other participants in the housing sector to make loans they knew were no good (an oversimplification to be sure, but apt nonetheless), and eventually the roof caved in on the market.  In 2008, the essential dynamics were the same, but everyone had convinced themselves that the markets were more sophisticated and could never allow things like that to happen again.  So, everyone told themselves this was different, and they dove into the markets headlong, ignoring all of the warning signs along the way that clearly told the story of what was coming had anyone bothered to notice.