Maybe what has happened in the past is the best guide in when and what to expect this time round .
Markets/cycles/booms etc are different every time.... the inputs are different, and consequently the outcomes are different. However, the constant is peoples behavior. An example - media & govt is telling us times are tough, the response of the masses is to cut discretionary spending & increase saving for the impending rainy day - it's built into our genes - it happens every time. If you can work out how the masses will react to a given set of inputs, then it's easier to catch the next wave.
Someone mentioned that property has slumped 18-24 mths after a stock market crash with others so there's the first guide, maybe.
I think that's an example based on a v. low number of instances. The inputs this time will be v. different from other times - high debt levels, FHOG, extremely poor global sentiment, probable global recession, increasing unemp, v.low IRs.... and consequently the result is likely to be different. And the timeframe v. different.
Months ago I believed Buffet saw this coming. He certainly talked about how this disaster could happen. However he's since lost countless billions. A lot of very smart blokes missed it. Gerry Harvey, Kerr Nielson, Pretty much every economist in the world. Only the perma bears saw this coming.
Can someone give TC some kudos for that 'cos I gotta spread it around first
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Since so few saw it coming, then I will conclude that the past tells us nothing and is almost useless. If you could look to the past and see these things, All the smart dudes would have known what was coming, so that means the bubble in everything would never have happened, and now there would be no bust.
I wouldn't agree that history is useless & tells us almost nothing. I think history gives us a reasonable base for assessing probabilities. And also a good basis for studying human behavior.
It's impossible to plan for every possible Black Swan that could occur. And for the majority of them, sensible risk management, adapting to the circumstances and taking a long term view will allow most to ride them out.
EG. That earthquake near Melb last week - standard insurance doesn't cover earthquakes - no-one could have predicted it. Historically Melbourne has had v. few earthquakes - it's a highly unlikely event. Should we all build earthquake-proof houses at huge expense to cater for a 1 in 10 million event ? of course not - the cost-benefit equation doesn't add up. We accept that everything has a degree of risk - hope for the best, but plan for (the more likely of) the worst.
