Are all trends cyclical? Hardly.
In the 90s, as growing demand and sophisticated technology converged to create the Internet, providing service to local subscribers was a great growth business. Look at the incredible growth of AOL, Compuserve, and hundreds of local ISPs throughout the country.
Today, however, Internet service is a commodity. There’s no hope of a repeat of the dramatic growth curve of the last two decades.
Trend, yes. No cycle.
But the housing boom of the last few years? That was an obvious trend, with an equally obvious cyclical behavior. Equity growth can’t continue at double digit rates indefinitely. By the time cab drivers and school teachers are buying second homes as investment properties, the boom is about over.
Trend? Definitely. Cycle? Equally definite.
We’ve seen this cycle before, haven’t we?
We’ve seen what happens after a real estate crash. We all remember 1992.
In each phase of each cycle, some businesses will benefit, and others will be damaged. Real estate brokers and mortgage lenders did very well during the real estate boom. They won’t be doing well in the immediate future. Bankruptcy attorneys and payday loan companies will, however.
While the housing bubble was rising, anyone hanging out a shingle got business. Advertising? That was a totally unnecessary expense.
Now that the bubble has burst, how many brokers have left the industry? How many have laid off their staff, and are again operating out of their homes?
Suppose you had been the one.
The one real estate broker in town who had realized that markets don’t go up forever. Suppose that you’d started building your image as a problem solver, as the company who can get it done, back when times were good. Who would stressed sellers turn to today to help them get their overpriced homes off the market?
The time to build image, to create Top-Of-Mind-Awareness, is before someone needs your services.
When times are good, people may choose you because of your reputation. They may choose you as a result of your advertising. But, sometimes, you may simply be the beneficiary of so many people in the market that you’re tripping over them.
That was a fair description of the recent real estate market in this country. It’s about to be the description of the state of personal finance, too.
Trend? Yup. Cyclical? Obviously. Predictable? You tell me.
And, much like real estate brokering, and mortgage lending in the early years of this decade, do you suspect a dramatic increase in the number of bankruptcy attorneys and payday loan companies?
Yes. It’s a safe bet (but probably a poor metaphor, huh?)
So, what’s ahead for bankruptcy attorneys and payday loan companies? A year or so of so much business they’ll trip over it. Followed by lean times when the “market correction” has played out.