Technology Booms and Busts

Published: Dec. 18, 2022, 6 a.m.

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Let\\u2019s look at the differences between when technology is in a boom-cycle vs. a bust-cycle, and what happens as things transition between cycles.\\xa0

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HOW CAN WE TELL WHAT CYCLE WE\\u2019RE IN?\\xa0

  • Right now, it feels like we\\u2019re in a bust cycle, or at least a correction-cycle, but how do we know what cycle we\\u2019re currently in - and more importantly - how do we know when the next cycle will begin?

THE GOOD TIMES, THE UNCERTAIN TIMES, AND THE BAD TIMES

  • History repeats itself, hence why it\\u2019s good to study history.\\xa0
  • Follow the money. Is money cheap? Is money highly leveraged? What is motivating the money?
  • Does it make sense to a layperson?\\xa0
  • Can the technology create a sustainable business model? Does it create an expanding ecosystem, or winner-takes-all?
  • Do the stories highlight the people, or the excesses of the people, or do they highlight value-creation? Stories are bolder in a boom.\\xa0
  • Booms will start slow, will gain word of mouth, will sustain for a while, will begin to reach, and then crash hard. People are never quite sure when to jump into a boom. Reactions are faster in a crash.\\xa0
  • Crashes happen quickly, as they are usually highly leveraged.\\xa0
  • The winners in a crash are the ones with money to buy low, or are capitalized after a crash.\\xa0

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