First The Numbers. Then The Story. Flying Too Close To The Sun.

Thing go wrong when our actions outpace first the numbers, and then the story.

I was reading Morgan Housel’s “Same As Ever” where he explained why we have cycles.

Say an economy is doing well. We have growth and optimism and investment.

Because it’s doing well more and more people pile in, wanting a return on their money.

After a while, there’s more money than the economy can absorb – so you go past the point where the numbers make sense.

A 10x PE becomes a 40X PE, because people believe it’s going to transform itself with some new technology and make huge amounts of money.

The story keeps the market rising.

And then, when you punch past the story horizon all that’s keeping you going is momentum.

And when that flames out, you experience what Icarus did, flying too close to the sun.

Markets. Companies. Political figures. They all go through this cycle. A slow start. Then pushing through horizons. Until they fall back and a new cycle begins.

The winners in a cycle aren’t the one’s that make it big.

They’re the ones that are resilient through the cycles – the ones that are still around when the noisemakers are out.

Warren Buffett stepped down this year from Berkshire Hathaway leaving a legacy that included a collection of curated businesses and some of the finest business writing education you could want.

That’s the kind of journey more of us should aim to take.