Dear Rick 9 – The Future of Business Cycles 1
Author(s): Scott Douglas Jacobsen and Rick Rosner
Publication (Outlet/Website): Dear Rick
Publication Date (yyyy/mm/dd): 2016/12/10
Scott: Business runs in cycles, plural. What about the future of business cycles?
Rick: There are a bunch of different cycles in economics. There are the major stock market cycles, bull markets and corrections. Generally, more bull markets eventually, which played out over a course of years.
Right now, we’re headed towards what people suspect is the tail end of an 8-year bull market because after the crash of 2007 and 2008 the market had no place to go but back up.
There are the cycles of individual businesses, where if you want to pick a stupid clichéd example then you’d go with buggy whips. They were a successful business for many, many generations until cars replaced horses.
You didn’t need to hit your horse on the ass. There are lots of companies that follow some kind of cycle. A cycle of creation, growth, and then obsolescence. Gonzo, typewriters, some companies have managed to hang around for a long time.
GE is the oldest company or the original company on the DOW industrial. It’s 10 years old. It was started by Thomas Edison, who was a prick. JP Morgan had to take the company away from him because he was bankrupting it or messing it up.
We saw George Westinghouse that made the light bulb. I just read a book about this. The boom-and-bust cycle of some companies are super fast – so fast that probably normal approaches to securitization, to selling it or an IPO.
That stuff, especially software and internet companies – apps, all that stuff, a company can get hot and then cold faster than people can make it into a publicly traded company and get their investment traded back. You can imagine stuff will continue to accelerate.
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