Today is a big day for the economy. And, it made me think of start-ups, trend-spotting and entrepreneurs.
But, bear with me as I explain.
It was announced today that housing prices are back on the rise, and the stock market has rallied strongly. I looked at the data and was surprised to find this: the rate of house price increases is accelerating. Below is a chart I made after downloading some data (the S&P/Case-Shiller Home Price Index). It shows year over year price increases.
I was surprised to find that housing is not only up but, every month, the price increases are accelerating.
I write about this because it highlighted to me how sometimes tipping points happen right under our noses. In the case of housing, prices stabilized last June, and then, gradually began to rise. And, kept rising and rising, faster and faster.
This is a big deal as rising home prices create a positive “wealth effect” that encourages consumers to spend more.
Now, the housing recovery is “obvious,” but it wasn’t clear just a little bit ago. And, if you bought housing stocks last summer, you’d be up a fair amount today. If you just jumped in the stock market today, it might be too late, as the big gains may have already happened.
Similarly, entrepreneurs need to not just follow trends, but be early enough to start trends.
It’s not easy. It takes a lot of guts to jump back in the stock market when the data are still murky. But, as in entrepreneurship, you don’t get rich by doing what everyone else is doing.
It’s something I think about a lot: how to start trends vs. just follow them?