Was reading a good article about ‘Simple rules of Capitalism‘. Amongst many things, one rule was very crisply articulated – let me quote it here:
People resist change; economies resist stability. A good rule of thumb from history is that the longer a boom or bust lasts, the stronger the forces are building up against it. There’s a reason for this: Booms cause people to discount room for error, while busts cause people to stockpile it. But people don’t think like that. We have short memories and poor imaginations, so the most common economic forecast of what will happen next is extrapolating whatever happened last. Bear markets breed pessimists, bull breed markets optimists. Consumer confidence peaked in 2000 and bottomed in 2009. Long-term government budget projections were staggeringly optimistic in 2000, and equally depressed in 2010. People forecast in straight lines, but markets push back against things attempting to stay the same, instead preferring cycles, waves, and new paradigms.
So simple but powerful truth – the way individuals and the markets behave — we know them still most of us behave the way we are expected to. The ones who become more aware and timely bring in the change – reap the fruits accordingly.