Why I've topped up my stake in LYL, page-8

"I think that the recency phenomenon is strong in people , and that they are still somewhat scarred and brutalised by the painful fallout that followed the previous peak.

I've enough grey hair to know that no two business cycles - whether at their respective peaks or troughs - are the same, and if you held a gun to my head and forced me to plot the shape of the current cycle, then I'd say that the peak will not get anywhere near the manic amplitude of the commodity boom of 2011/12, but that this one is likely to be more enduring in terms of time."

@madamswer

I suspect you are right on the money. It is fascinating how markets work, isn't it? During the good times, the market seems to think good thing will never end. After the bad times (especially after a mother-of-all busts) the market thinks bad things are always lurking and are just around the corner.

Essentially this was the broader market experience of the GFC, was it not? In the lead up, everyone was in the cheer squad. After the bust (one once again, it was a mother-of-all-busts) everyone was for ever waiting for the next correction, and getting spooked with each market blip. And in fact as the market has continued to fret, it has continued to rise (climbing the proverbial wall of worry) - because although the duration of the rise has been record braking, the strength of it has not necessarily been so. And it has not been so, because everyone has been worried about the markets rise, thus providing a dampening feedback mechanism.

Eventually, if the market loses its current fear, then the situation will be quite different (it may already be commencing, though only just, for the broader market).

As you have very wisely suggested, something very similar is likely at play in the mining investment sector (though at an earlier stage of).

Like you, I think it's dangerous to speak with too much certainty, especially as after a while one might start thinking they have sage-like insights (very dangerous)...

But, I think this is all a strong reminder that the guy (or gal) who can be fearful when others are enthusiastic, and excited when others are fearful - is at a huge advantage.


PS: I think another factor to consider is that the market looks at current revenues and compares these to where they were during the last peak. . But this ignores the influence of inflation with each passing year, as well as the influence of real global GDP growth (equal peaks ain't necessarily equal peaks).

PPS: Finally, and I suspect more importantly (and which also applies to the likes of MND), the market probably indiscriminately lumps all contractors in the same basket. My feeling is that the likes of LYL (and MND) grow relatively stronger with each passing cycle, and are in the process of demonstrating increased market share (or organic growth). I could be wrong here - but that's my strong sense.