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The philosophy behind boom and bust

Over the last few months there has been much mention of the economic cycle, the so-called boom and bust scenario, but does it actually exist?

Statistics show that we have experienced regular boom and bust economic cycles since time began and despite the attempts of many political parties and political leaders, this is a human issue which will never go away. In the good times everybody wants a slice of the action and is desperate to make money while in the bad times everybody wants out of the market, often at any price.

While the property market is perhaps the traditional "boom and bust sector" this is a philosophy which is repeated in every single investment market in the world. We have seen similar phases in the oil market, the Internet market, and the gold market and an array of other niche investment market. The truth is that human emotion will ensure that even after the toughest of times, investors will at some stage flock back and pay over the odds for a slice of a potentially lucrative investment.

While authorities around the world can to some extent regulate the supply of funds by economic policies and adjusting base rates, ultimately the wave of human emotion and human investment philosophy will take over.

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