The Boom And Bust Cycle

[Money Trust]

Am I in the minority in my belief that the boom and bust cycle is actually a good thing? Before those who disagree dish their insults, let me explain my reasoning.

I feel this way because the boom and bust cycle, to me, simply is nothing more than a transference of wealth. During times of recession or depression, that may be the best chance that your average working person has of amassing wealth granted that they've saved cash. For instance, I know a woman who back in 08 (after the market crashed), bought a few blue chip stocks for dirt cheap and profited more than $500k a year later. Mind you, this woman was earning $30k a year on her day job. I know a few more people who came up during this time as well.

IMO, the boom and bust cycle rewards those that have taken the time to learn how the economic game is played. This doesn't apply only to traders and investors but all across the board it applies. But....what do YOU think?

 

[Arnie]

I think its healthy for a market to have ups and downs, not necessarily "booms and busts". It how over-capacity gets wrung out and how capital finds new opportunities (i.e new ideas attract capital).

It seems to me, that under W, any hint of a downturn was "bad". Remember? Right after the tech bubble? That thinking only got worse during the recent "crisis" and has been exacerbated by the Fed.

I can't help but believe that the economy would be MUCH stronger had they let some of the large banks and auto co go into bk. The govt could (and should) have helped in other ways to lessen the very bad effects that would have resulted. As bad as it would have been, it would be a distant memory now. But that horse has left the barn and I doubt he will be corralled any time soon.