Just like a treadmill, if you continue to increase the speed, at one stage you either push the ‘emergency stop’ button or you may fall.
People born in the 1980s saw India changing during their teenage and people born in the 1990s, saw only the new India.
The colonial mindset is now reduced, and boundless energy is unleashed. Today’s generation wants to conquer the world.
When you want to conquer the world, the expectations are extremely high. The treadmill is running at a high speed.
Here are a few of my observations:
Employment
When you work for 14-16 hours a day for promotion and/or increment, sooner than later you reach a dead end. Either the increments moderate or the frequency of promotion reduces.
You start to feel disconnected from the organization and eventually start to look out thinking that the outside world is a fair place.
The change of job starts with fresh energy, but it is just about time, again the treadmill speed becomes too high, and the fallout happens.
Corporate
Satyam’s fraud started with a tiny amount of showing dubious cash in the bank. The expectations from the shareholder and management greed continued to push the treadmill until it reached massive suspicious cash in bank entry of $1 billion. And one fine day, it all crashed.
A similar pattern can be observed in the Bernie Madoff scandal. It started small but, in a few years, became the largest Ponzi scheme in history, worth about $65 billion.
Bernie Madoff “I didn’t know where to stop”
Economic bubbles
Markets move as a pendulum, from optimism to pessimism. It all starts with positive market sentiments, lower interest rates, and in a few years, the world faces high inflation, then an increase in interest rates, and finally recession.
Stock market
Expectations drive a company’s stock price as well as its actual performance, so the higher your expectations, the faster you must run to keep up. However, there is a limit to how fast and how long you can run. Eventually, either a fraud will emerge, or the growth will taper down.
The concept of the expectations treadmill can be applied across non-financial matters too including, dieting, marriage, etc.
“the secret to a long marriage is lowering your expectations” - Warren Buffett
How do you see others being trapped?
Moderate behaviour is difficult to spot, however, extreme behaviour is relatively easy to spot. Look for extreme behaviour.
In the case of employment, if someone is excited about his/her work, he/she tap dances to work. However, in case someone is unhappy, you will see fewer smiles and more sick leaves.
If the economy is doing good, news across the media is filled with optimism as if nothing bad can ever happen. This is a cue, to apply caution in these situations.
If the management is unethical, they would often avoid answering questions, show arrogance and position themselves more than the business. Avoid dealing with these businesses.
There’s never just one cockroach in the kitchen - Warren Buffett
How do you avoid being trapped?
The fear of a fall should not prevent you from setting goals. You should look up with your eyes on the ground. The focus should be on the present, each day should be spent refining the process.
Expectations are linked with the future and outcome. As far as you focus on the task at hand without any focus on the outcome, while improving your process every single day, you will avoid falling.
A good state is somewhere in the middle of fear and greed.
Disclaimers
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
The securities quoted are for illustration only and are not recommendatory.
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Details of the advisor
Advisor: Ankur Kapur
SEBI RIA No.: INA100001406
BASL Member ID: BASL1337