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> I have to wonder if more balance with this would result in better outcomes, or worse. After reading Taleb, these "boom or bust" cycles are a feature not a bu
by huijzer 2y ago
> I have to wonder if more balance with this would result in better outcomes, or worse.
After reading Taleb, these "boom or bust" cycles are a feature not a bug. My own simplified interpretation: You need booms to fund moonshot ideas and busts to get rid of ideas that don't work. Also a bit similar to neural network training. You first pump in all kinds of information and then aggressively prune to get rid of mostly bad information.
- imtringued 2y agoThat doesn't explain why they all have to line up in time. If each individual boom or bust was spread over time, it would disappear in the noise.
- andruby 2y agoThey don't always all line up in time. Companies grow and die all the time. Trends, Hypes and Bubbles are probably a consequence of human nature: most investors have a deep fear-of-missing out, so in general money loves to jump on the hype-train. Likewise, fear and uncertainty easily spread: markets moving together. When a couple of businesses fail, that insolvency or illiquidity spreads to related businesses.
- bobthepanda 2y agoBooms and busts have cyclic effects. Booms provide more capital and credit that can be reinvested and beget more booms; busts collapse demand and can contagiously bust other sectors.