What market correction should mean in real markets

Reblogging this with reference to the bankruptcy of Hanjin Shipping – it’s not a disaster, it’s to be expected in light of a shrinking market for international goods. Other companies will come in to replace them – and the market will improve for those remaining. If we all have less disposable income, this market will continue to shrink. It’s just a fact. It’s also a fact that if more companies move into that market, or expand their operation in that market, someone will have to reduce theirs, or go out of business.

Selah Ministries

Years ago I ran a small horticultural business, and I recall a more experienced nurseryman than I explaining the cause and effect of a ‘market correction.’

Say you start a small annual event – a plant sale. You invite just ten nurseries and you advertise it like crazy. Those ten nurseries all have a fabulous day, and book to come again next year.

Then you decide that you are onto a winner, so you invite fifteen nurseries the following year, and as the event is still new you advertise like crazy and everybody has a good day.

Year three you invite twenty nurseries, and advertise in the same old places as last year. Everybody has an OK day – numbers through the gate are static.

The year after you invite twenty five nurseries, and again everyone has an OK day – the take is a little lower, and you’re seeing…

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