Market Patterns and Employment

In the past I've written about human behaviour as it relates to speculative markets (i.e. stock market, cryptocurrency market), and the emotions that lead us to make bad decisions. There's a reason why only 10% of speculative investors make money in the stock markets, and why only 4% of businesses succeed in the long run.

In fact, I would argue that the very same emotions are responsible for the large failure rate in both speculative investments and in business, and the reason for this is simple: having your own business is an investment that only pays off later, and only if you don't rob the business of it's fuel source, namely money. It's akin to a farmer eating all their seeds and having none left to plant for next year's crops.

But this isn't a guide on how to start or run a business. In fact, I would strongly advise people to weigh the consequences of quitting your job and starting your own business.

If you were around during the 2017 Bitcoin peak, you might recall that a lot of people were making terrible life choices. Youtubers were quitting their day jobs and doing crypto news full time. Steemians were quitting their job and doing Steem full time. Some people were even taking out mortgages on their house to build Bitcoin mining farms. These are just some of the choices that people make during the peak of a market cycle.

Lets move over to the job market. I'll use a story to illustrate the point.

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The following story is complete fiction

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This is bob.

Bob has worked at his place of employment since 2010. Bob has always made good money, but he's tired of the same old routine, he tired of his boss, he's tired of feeling like he's doing more and more for less pay. His friends are talking about starting up their own business, and Bobs partner at home tells him they can make the adjustments to accommodate, and they have some money saved up to get going, and the banks are handing out loans like candy. Bob decides he would be missing an opportunity of a lifetime to be his own boss and make the big bucks that he believes his employer is making.

Bob gets a bank loan for a vehicle and tools, and to set up a home office and turn his garage into his business work area to store his tools and job materials. Bob buys advertising space online and in local news flyers, and soon he is getting jobs.

The first day he services two customers, and at the end of the day he goes home happy, feeling like he is finally making it in the world. He owes the banks a lot of money, and he is pulling money from his house equity line of credit to buy job materials, to fill up his vehicle with gas, and to pay for his everyday expenses like food and utilities. He is hopeful that his business is successful, so he and his partner can pay off these debts and start saving money again at some point in the future.

The second day bob is listening to the radio news and hears the broadcaster say "folks it looks like we're now officially in a recession."

Bob wonders what this could mean.

During the middle of the second day of work, bob receives a text from his partner at home, telling him that a customer from the first day is complaining that bob didn't fix something properly, and that they are refusing to pay the bill. Bob gets a sick feeling in his stomach, and gets flashbacks to all the times he screwed up on the job and had to hear about it from his boss.

At the end of the day bob goes home and is in a sour mood, and vents at his partner in anger. Bob's partner asks what they did wrong and bob apologizes, saying he is just stressed out with the piling debt and now a customer is refusing to pay, which means bob is already losing money.

A rough month goes by and bob gets a letter from the bank notifying him that they are increasing the interest rate on his line of credit. Bob and his partner look at their finances and come to the conclusion that they will be bankrupt in 2 months unless they start making more money. In a months time, bob has done 50 jobs, but only 10 of the customers have paid their bill, 3 are complaining about the price, and 2 more are refusing to pay because they weren't happy with his work.

Time continues to press onward and Bob keeps hearing about this "recession" talk and how everyone is tightening their purse strings. Bob notices that he isn't getting as much work coming in, and the work he does get isn't making much money.

At home, Bob and his partner are fighting about money, and the arguments are getting worse. One day Bob's partner leaves him and wants a separation. Bob's business is finished as they sell the house, the new work vehicle, the new tools. They pay off their debts and split whatever little money is left.

Bob has no home, no vehicle, and no job. Bob looks back in time to when he was happily married and had a steady job. Those were the days. Now Bob sleeps on his friend George's couch, but things are not going good there either. George quit his job to work somewhere else for more money, but now George is getting laid off because he has the least seniority, and his old boss won't hire George back.

George and Bob don't talk about work or money, and they're drinking a lot. George and Bob get into an argument and George kicks bob out onto the street for being a bum. The following week, George gets evicted from his house as the bank rolls in to repossess everything.

Bob and George are broke, homeless, jobless, and the economy is in recession. They hang out in coffee shops hoping to find part time work. They offer old friends and neighbors to do yard work under the table for cash.

Bob and George made bad choices. Don't be like them and get caught up in the FOMO (fear of missing out).

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Again, this story of Bob and George is a work of complete fiction. Any likeness to someone else or their life is mere coincidence.

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Long story short, don't get caught up in the hype. When a market is at its peak, people do stupid sh!t and make dumb mistakes. Don't sacrifice everything you have because you're afraid of missing out on an opportunity; in the long run you might just lose everything you have worked for, because markets don't care about your well being, and not all opportunities pan out.

Timing is everything in life, and I believe that with conviction. Right now is not the time to start a new business or to switch jobs if you absolutely do not have to. One in the hand is worth two in the bush, and right now smoke is coming out of that bush, which means there might be fire too.

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Hopefully this post helps someone to make a better choice in their life, and to make smarter decisions. I've been lucky in my own life to have wiser and older family members around who cared enough to share their wisdom with me when i was young so that I know better, and I can't help but feel terrible for others who are the Bobs and Georges of the world, chasing the high and paying the price for it.

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Thank you for reading. shares and comments are always welcome.