by Jon S. Strebler
The belief that “this time is different” defines one of the most difficult problems investors confront over time. The idea is that markets, be they stocks, real estate, gold, or whatever, trend higher for a period of time, become over-valued, and then trend lower for a period of time, until they are under-valued. This is the basic nature of investments, an immutable cyclical process that cannot be denied or repealed. Knowing that, then why do people buy an item after it has already gone way up, or sell something after its price has already been decimated? They do so because “this time is different”, and therefore it still has much higher (or much lower) to go – or so they have come to believe.