In 2009 I walked away from my first business, it was a total loss. Literally and figuratively. I lost everything, and it was a very humbling experience.
I’m not an economist but I have been a business owner for 12 years, and prior losses have taught me to pay attention to the signs. Executives and owners who don’t take the time to read the economy with an eye toward future trends end up like Toys R Us and Blockbuster — formerly billion dollar companies but now just case studies in business schools of what not to do.
The problem with most recessions is being hard to predict when they will happen, and most people don’t pay attention until it’s too late. Then they act irrationally and start re-arranging deck chairs on their own personal version of the Titanic.
Traditional economic models use to rely on rational behavior, but people don’t act rationally. Behavioral economist Richard Thayer explains this well in his book, Misbehaving. People buy Bitcoin at $19k and then sell when it drops below $10k and don’t see opportunity in buying it as $6k. Buy high sell low. The people that made a fortune in Bitcoin didn’t jump on the trend; they were in it years before it went mainstream.