It is a Cycle

We humans tend to be short-sighted. We see the current situation and react to it. For some reason we do not seem to learn from history. When things are bad we cannot see that they will get better. When things are good we cannot see that they will get worse.

During the years prior to the current recession many people seemed to think that we were not going to see a depression or a recession again. There were even so-called experts telling the public that the real estate growth would continue indefinitely and that the up and down economic cycles of the past would not repeat.

The remarkable thing is that people seem to always think this in good times. People thought this in the roaring 20s when the experts predicted that the good times would last indefinitely. As sure as the sun rising the Great Depression followed.

During the Depression there were those who predicted we would never see prosperity again. There were experts predicting a permanent failed economy.

During each economic growth period since the Depression people acted as though the good times would last forever.

Here is the reality. It has happened over and over again, decade after decade, for over two centuries. We experience a growth period with prosperity. It is followed by an “adjustment” period when the market falls and prices drop. Unemployment goes up and we are in hard times again.

It is a cycle. It is always in a cycle. There will always be good times followed by hard times followed by good times. The severity of the hard times may vary. The level of prosperity in each up cycle may also vary. But you can be assured of one thing – it will always go up and down. Always.

The good news is that the current economy will eventually pull out and there will be good times again. Just as assuredly that will be followed by another downturn. This applies to the stock market, the real estate market, and the entire economy.

The smart thing to do is to prepare for the hard times during the good times. Avoid unnecessary debt in all times. Institute and maintain a savings and investment program during all times. Build up reserves in the good times so you can weather the hard times.

This is not rocket science. It is predictable and obvious to anyone who looks at several decades of economic conditions. Those who learn this and act accordingly will be OK during both good and bad times.

Always remember it is a cycle.

Wishing you success and prosperity,

Daniel R. Murphy
Helping People Learn to Build Wealth

Wishing you Success and Prosperity,

Daniel R. Murphy

Wishing you well,

Daniel R. Murphy
Educating people for building wealth, adapting to a changing future and personal development.