People in the financial services industry LOVE charts, especially ones with upward sloping lines. Charts, replete with disclaimers basically saying that you should not pay any attention to charts, have been the go-to-sales-tool for financial professionals since I can remember. For all I know, our great great great ancestors drew charts on their cave walls in an effort to persuade (er, advise) their cave mates. However, this is not a history lesson about charts, per se. Rather, it is a non-academic (caveman's) look at what we can learn from going over a cliff. The series of charts below tell a rather interesting, albeit anecdotal, story. The moral of that story is that our perceptions (and resulting decisions) are often influenced by our current reality.

1. THIS, my friends, is a financial cliff. During the “Great Recession” of
2007 – 08, somewhere between $10 and $15 trillion of wealth was
wiped out in the US alone due to the decline in equity prices.
Globally, the estimates are on the order of $35 trillion, or more.
This 6,000—point rally
partially explains why the ‘Are
you better off?’ question did
not get much traction before
the last election.
When you are laying at the bottom of the canyon (after this kind of fall) it is
virtually impossible to think clearly, much less envision the kind of rally that took
place from 2009 – 2013.To appreciate the power that our “current reality” has on
us, go back and read the press coverage from early 2009.We tend to view (and
extrapolate) things based on what we see right in front of us.This myopic view is
only accentuated by what we take in via our media sources.

2. This is what things looked (felt) like in mid-2007.The market had
been screaming for several years. Many of us were still attending
seminars and webinars on how to “flip” real estate. Life was good,
people were generally happy.
This 6,000—point rally
partially explains why the
‘Are you better off?’
question did not get
much traction before the
last election.

3. This 6,000—point rally
partially explains why the
‘Are you better off?’
question did not get
much traction before the
last election.
This is what things looked (felt) like in early 2009.The stock market was in a
virtual free-fall for nine months. DJIA went from 14,164 to 6,547.That was very
scary and, worst of all, it really hurt.

4. Déjà vu all over again…
So, here we are again. But this time, we really don’t know what lies
ahead. If there is one thing we have learned it is that our
perceptions (and decisions) are guided by our current reality.They
are further influenced by social media, etc.We also know that the
consensus opinion is often wrong, especially when it comes to
economic and stock market predictions.