Imagine this: someone approaches you, excited. They claim they’re an expert, and from their suit and confident demeanor, you’re inclined to believe them. They tell you that they have an incredible opportunity – absolutely incredible!
“There will be no more fall and winter,” they claim, “Without fall and winter, fields can be harvested and planted continuously throughout the year. Crop yields will boom. We’ll make a fortune!”
“No more winter?” You ask. “But there’s always been winter.”
“Ah, yes,” They respond. “But this time it’s different. Look around. It’s almost September, and temperatures still haven’t dropped. That must mean that this time it’s different.”
What do you do? Do you believe them?
Of course not.
Photo by Randy Fath on Unsplash
This happens all the time in the finance world
If you listen carefully, you will hear people say the same thing constantly.
During the bull run of the 90s, the stock markets kept going up. When people remarked that a correction was possible, the response was “This time it’s different.”
Then the dot-com bubble burst.
During the 2000s the real estate market was on fire. It kept going up, and when a few people remarked that they thought a correction was coming, the response was “This time it’s different.”
Then the real estate market melted, leading to the 2008 crisis.
During 2020 and 2021 as cryptocurrencies and NFTs took off, whenever people said that it was a bubble, the response was, again, “This time it’s different.”
And don’t think that only bull markets are guilty of saying this. During every correction, every recession, some will say that the market will improve eventually, and the response is always “This time it’s different.”
But it never is.
A famous man once said…
“History doesn’t repeat, but it does rhyme.” ~ Mark Twain
Oddly enough, this quote has proven to be true time and time again. And the financial world is not immune to it.
Markets will go up, and markets will go down. If you hear somebody say differently, take a look at what they’re trying to sell you. And yes, they probably are trying to sell you something. It’s the best way to make money by betting against the course of history.
Beware “This time it’s different.”
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