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Thursday, February 15, 2007

Points of Inflection

I spend a lot of time trying to figure out big, long term trends that might be happening. In general, they're hard to detect at the time because they occur so slowly. I also like to go back and find out where I was right and where I was wrong.

I've been consistently wrong by overestimating economic downturns in otherwise successful economies. 1990 and 2002 both seemed a lot more serious at the time than in hindsight. It amazed me that 1987 was just a blip in the stock market. The S&L crisis is a forgotten memory. The long term trend in reasonably free markets is up. And the long term trend in places that have been economically screwed up and suddenly fixed is seriously up.

Neanderthals and Cro Magnons overlap
It was January 1982 when I entered the workforce. We had a typing pool where you'd handwrite a document and then bring it upstairs to the typing pool of secretaries with typewriters. They'd type what you wrote, getting all sorts of things wrong and drop it into your designated corporate mailbox tray. You'd write corrections and walk it back up. Eventually you'd have a finished memo with a list of names at the top to be handed to your own secretary who would then make copies and use a yellow highlighter to indicate one of the addressee names on each copy, which would then be distributed in each person's mailbox tray. The typing pool typists got very disturbed by the fact that I started giving them computer printouts containing the text that I wanted typed up. They were mostly gone within a year or so.

That seemed like a time of great change. Most people thought of computers as giant mainframes guarded in bright rooms while simultaneously a whole unseen wave of people were using small personal computers and word processors. Charlie Chaplin broke the news to the masses. Japanese cars were getting serious and seriously noticed. The US economy finally started getting fixed. The long dead stock market started going up for a change. "High tech" started getting the spotlight. I view that early 1980s period as a point of inflection, a sharp turn. Things are always changing, but it seems like there are points in time when the prevailing view breaks and re-forms to something different as a result of a particularly high gradient between the old and new.

It seems to me like 1995 was also like that. Most of the world had never heard of the Internet and it seemed like a secret world and you were either in it or totally unaware of it. The time of DOOM and the World Wide Web. It was also the time of Yahoo (which would go public a year later) and the dot coms. It was the year that you might suddenly realize, "Hey, the economy isn't all that bad anymore."

Is 2007 another one of those points? I'm increasingly getting the sense that it is.

UPDATE Feb 21, 2007:
This seems like the future of the personal loan industry: www.prosper.com. Real "Army of Davids" type stuff.

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