Recently, my colleague Brennan published a post relating our current economic climate to that of the 1970's. This concept of a cyclical economy is something that has been studied in great detail for many years. As Brennan posed, history never repeats itself exactly, but there are often many measurable similarities. I will refrain from discussing the statistics, historical and mathematical studies on cycles (believe me, there are thousands).
What I believe to be more important are the emotional effects on investors. No matter how many economic crises we have, or periods of time where it is near almost impossible to lose money in the markets, we seldom consider anything but the present. This is why it's so important to have an evenhanded, unbiased plan for reaching your financial goals. When you're down on your luck it seems as if things will never get better and when you're flush you convince yourself that this will go on forever. The same is true with investing, where mother market will always find a way to surprise you.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).