Harry S. Dent | Tuesday, December 4, 2012 >>
People are nuts.
Ok. They’re not nuts all of the time. They only become nuts when everyone else becomes nuts. It’s the S-Curve of humanity.
The S-Curve is one of our primary forecasting tools. It allows us to see how deeply a product, service or activity has infiltrated its “market”… that is, how far that product, service or activity has moved from being unique and niche to being the norm.
Cars began their move along this curve at the beginning of the 20th century. They started out as something only the wealthy or adventurous drove – expensive and inaccessible to the average Joe – and today they’re everywhere. People hardly walk anywhere any more. Imagine what life would be like if cars disappeared tomorrow? Chaos, if you ask me.
In much the same way, human behavior moves along an S-Curve, albeit it faster…
Because of the positive bias we all naturally have, we think we’re unique. Most of us think we’re above average in intelligence, in looks, as lovers, as drivers… we all think our kids are above average as well!
Yeah right! What we really are is sheep.
A few people borrow money to buy a bigger home and before you know it, every man and his dog is mortgaging himself to within an inch of his life to buy a bigger home as well – even though he can’t afford it – because everyone has the right to “own” property. From niche to mass market.
Or one or two bankers take unnecessary risk, lending money to a client who was unable to produce the appropriate paper work… and suddenly every bank is offering NINJA loans and making mortgage deals with the devil. Deal we’ve since come to regret.
Or, and this is the most damaging S-Curve of them all, a central bank or two decides to stimulate its economy just a little – to see it over the bad patch – and before you know it, we’re where we are today…
We live in a world where the Fed’s crazy stimulus policy is accepted as normal. Where the likes of Warren Buffett – a man who prided himself on being a contrarian thinker – now believes the artificial stimulus is a good thing.
That is just nuts!
People have gone nuts… because other people have gone nuts as well. They’re boiling to death in a pot of heating water because none of the other frogs have jumped out yet!
And they call ME nuts?!?
In my experience, the key to prosperity is clearly to stay realistic. My father used to say: “people are unrealistic, therefore they are irresponsible.” I didn’t fully understand that until recently. Now I understand it perfectly…
Most people don’t do stupid things because they are criminals by nature (although some clearly are). They do dumb things because they are out of touch with reality. And when you’re out of touch with reality you make bad decisions.
The greatest entrepreneurs, like Henry Ford and Steve Jobs, achieved such staggering success because they saw a simple reality and acted on it. Countless smaller entrepreneurs, pragmatic business people and innovators succeed because they don’t get sucked up the S-Curve to la-la land. Instead, they see the reality and they act accordingly.
The only reason I have developed major new insights into economics is because I came from outside the box. I look at the economy as it is, not as how I want it to be or as how others see it.
I’m objective and curious. I question the status quo. And yes, while I am a little nuts in other areas of my life, as my wife and three grown step-kids would attest to, in my professional and financial life I act on the reality I see. That’s how I can do the right things to improve my standard of living… and how I can help you do the same thing.
Governments, businesses, financial institutions and consumers around the world, are more out of touch with reality than ever before. We have seen the greatest debt bubble in history and the majority now thinks this craziness is normal.
I’m here to tell you that the situation and the proposed remedies are crazier than they were yesterday. The temperature boiling the frogs in the pot is rapidly approaching 212 degrees and it’s time to get the hell out of the water.
Conserve whatever assets, jobs and income you have before the next bubble burst comes. Do it now. Time is running out.
Ahead of the Curve with Adam O’Dell
Yesterday, I shared a ratio chart comparing Germany and Spain. Today, let’s look at two U.S. equity indices: the Dow Jones Industrial Average and the Nasdaq.