Trends

 

She’s Like A Rainbow

She comes in colors everywhere

She combs her hair

She's like a rainbow.

What if everyone could see rainbows everywhere?

People are hard wired to see and use straight line, trends, or what mathematicians would call a slope. But a slope can only properly be defined for the points that are known. A problem is when people make predictions by using trends.  E.g. Beanie Babies will ALWAYS increase in value.  The Yankees will never LOSE.  London will be BURIED in horse manure by 1944. 

The problem is when we forecast using straight lines. Life doesn’t always follow straight lines, even if we think following a straight path is considered good and following a curved, crooked, path is bad.

There is nothing wrong with straight lines.  Isaac Newton developed calculus by examining the behavior of infinitely short straight lines.  But the end result of calculus was a way of dealing with non-linear equations, i.e.  equations that are not  straight lines.  Because that is the way the world works.  Newton’s Law of Gravity can be used to describes the flight of a projectile firing upwards as following Gravity’s Rainbow.  

People get euphoric when they are on the upwards part of a trend (e.g. slope greater than one). They  think that things will only get better and their bubble will never burst.  People panic when they are on the downward part of a trend (e.g. slope less than one). They think that things will only get worse and will never hit bottom. The problem is that neither forecast is probably true.  We need to realize that we are on a rainbow ( non-linear curve) and just because we are going up now, it doesn’t mean that we won’t be going down later, and vice versa. If we can agree that we are on a rainbow shape, maybe then we can see the colors of the rainbow too!