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Having a lot of choices actually makes us unhappy.We have all been there: standing in aisle five of the supermarket trying to decide which jar of mustard to buy. Do we go organic, or for the brand with whole mustard seeds? Or do we simply pick the one in the brightest yellow bottle?Many studies — many from TED speakers suggest that having a variety of options isn’t always what we need.Jam problem:TED speaker Sheena Iyengar, a professor at Columbia University, performed a classic experiment in the field of choice studies in 1995. In the study, Iyengar presented shoppers in a gourmet market with a display of jams. At times, the display showed 24 varieties. At others, it included only six. Iyengar found that with 24 possible options, consumers questioned themselves and only 3% made a jam purchase. At the small display, nearly a third of consumers who stopped by bought a jar of jam.The pasta problem:Howard Moskowitz, a psychophysicist turned market researcher, was asked by Prego spaghetti sauce in the early ‘80s to help them revise their product line. And thus he started with 45 pasta . But, using the knowledge he had gained from working for brands like Pepsi and Vlassic Pickles, Moskowitz recommended that rather than offering a large number of varieties, Prego look for a simple solution. In the end, Prego added to a single variety to its product line — extra chunky. The company made $600 million by giving consumers a targeted choice rather than unlimited options.Life and death decisions:Iyengar recently moved her focus onto the weighty decisions made in hospitals. In her TEDTalk , she describes a study conducted on parents in both France and the United States who’d been faced with the horrible decision to take their infant off of life support. In the United States, this decision rests on the parents. However, in France, this decision is made by medical professionals. Iyengar and her fellow researchers looked at how the parents felt a year after in both countries. They found that while American parents harbored hugely negative emotions about the experience, the French parents were more able to reframe the tragedy with statements like, “Noah was here for so little time, but he taught us so much.”Source: Does having choice make us happy? 6 studies that suggest it doesn’t always

Every crash has its reasons.We can take a short history lesson here to the causes of our previous crashes.In 2002 of October, the Nasdaq Composite had fallen 78% from its peak.The internet bubble had burst. Far too many companies online. Some people got out because they were lucky. Mark Cuban sold Audionet to Yahoo! in 1999 for $5.7 billion. About as lucky as it gets. Yahoo! was acquired by Verizon in 2017 for $4.83 billion.But the internet bubble isn’t what you think it was. It wasn’t this stretch for market perception that didn’t exist. It was too early. There were approximately 17 million websites in 2000. By 2010, there were 200 million. Today, that number is in the billions.It’s very much a story about how the internet was far too early for the market.Amazon lost about 95% of its value in that internet bubble. You see answers constantly talking about how you don’t want to catch a company that is going to go bankrupt. Amazon was that company that was on its way to bankruptcy. It was saved by an accidental loan that the CFO attained a few months before the economy completely tanked. That loan saved Amazon for a few years until AWS was created.Crashes are only valuable if you understand the dynamics at play.In 2008, the financial crisis was felt all around the country. Home prices swayed like this:Something far more sinister happened. The one thing most people felt safe about, they couldn’t afford anymore. People lost net worth, like this:Something to the tune of $7 trillion, gone. All because bankers began to make bets on the confidence of groups of these mortgages they handed out to people who couldn’t actually afford them in reality.Same thing, the indices fell a tragic amount, but then companies grew out of the chaos to see positive cash flow again.Just 2 years ago, in October, the S&P 500 was about to break 3,000. Then, in a little over a month, it fell to about 2,400.A trade war looming with China made investors feel uneasy about quarterly profit figures going forward. Almost immediately, prices for the companies in the index spiked right back up.And now, this crash currently. It’s more like the internet bubble and the mortgage crisis than we think. Everybody is talking about the coronavirus instead, but I’ve never known a time in history where every single person tends to profit simultaneously on the markets. In fact, that’s mathematically impossible. Almost everybody loses.Nonfinancial corporate debt. That’s manufacturing, services, government, homeowners.So while this was happening:We allow businesses in this country to take loans from the government in exchange for corporate bonds that the government regularly collects on. Corporations have credit scores a lot like individuals. Their credit scores go something like this:If you were to guess which level of bonds were boiling over, which would it be?So the government is in a bit of a pickle now. They’ve probably overlended to businesses that, while essential to the economy, should have been more conservative with their future growth estimates. A lot of these businesses are now closed, and their debt is going to be due. They’re medium to low-grade investments, so, like the historic crash of 2008, we may very well have the government artificially creating a crisis that should have never happened to begin with. These companies will be bailed out.The dynamic properties that allow our economy to run are literally creating the crisis. This isn’t the coronavirus startling investors to move out from the market. It’s not a falling knife. It’s not about companies going bankrupt. It’s about the government getting on top of its mistakes and beginning to fire the people in charge.I think Jon Stewart said it best to Jim Cramer after the 2008 crisis:“I understand you want to make finance entertaining, but it's not a fucking game. And when I watch that, I get, I can't tell you how angry that makes me. Because what it says to me is: you all know. You all know what's going on. You know, you can draw a straight line from those shenanigans to the stuff that was being pulled at Bear, and AIG, and all this derivative market stuff that is this weird Wall Street side bet.”Addendum: These case studies may or may not be a guide in helping someone find which stocks could appreciate in a down-market such as now. What those stocks are and which companies can grow while others sink in artificial debt is the billion dollar question most investors are looking to answer in some small capacity.

Many years ago I’ve read a very insightful article on the subject, and I’ve miraculously been able to recover it: How China Won and Russia LostI strongly suggest you read it but, to sum up: dekulakization in the USSR was complete, both in terms of means (the best part of the 20s as well as the early 30s were spent violently persecuting them, with rabid mobs, military-style actions, deportation to the GULag, mass executions, artificial famines) and in terms of sheer chronological distance: in the 1980s there simply was nobody left alive to remember functionally how entrepreneurship and demand/supply work.In the USSR, the “Old Man” and his knowledge of how “capitalism” (ie. free trade) works were eradicated, and the path to Communism was taken at full speed.Keep in mind that “kulaks”, despite being painted as rich, greedy exploiters, where in fact simple peasants, with very slightly above-average wealth: some could afford to hire a hand for the reaping season, some had one more cow than their neighbors, or two pigs — maybe they were filthy rich and owned a horse. Most were simply poor but enterprising peasants and in many villages, all it took to be branded a kulak was an envious neighbor calling you that.Thus were all traces of rural entrepreneurship wiped out, that had emerged after the emancipation of serfs in 1861. Quoting from the linked study:By Gorbachev’s time, the farm population had shrunk to a quarter of its former size; only older workers remained, working perfunctorily on state land or tending their private plots. They had long been converted into wage workers and received pensions and socialized medical care, albeit of a low quality. In China, rural dwellers accounted for 80 percent of the population; compared to Russian farmers they were young and vibrant. They lived without the social guarantees of Russian farmers. In China, only the young had not experienced private agriculture. Small private plots had existed in China for 2,000 years. An elderly farmer in Jingshan village succinctly captured this historical memory: “Family farming is as natural as human desire to eat, to have sex, and to love grandchildren. We loved family farming because it gave us some freedom. The leaders thought they knew better how to live our lives. But it is our lives, isn’t it?”In Russia, few farm dwellers could even remember the last experiment with private agriculture in the 1920s.In the wake of this Randian eradication of entrepreneurship, only Dirigist pseudo-economics were left. Fast forward half a century and this is, in the immortal prose of P.J. O’Rourke, people’s economic reasoning in the Gorbachov era:They were fabulous markets. They’d do any nation proud. Except for one little problem — no customers. Some people were wandering around but it was the kind of wandering that Americans do in Porsche showrooms. Prices in the private markets were high. Meat was selling for 25 rubles a kilo. That’s 38c a pound, but the average Ukrainian makes 250 rubles a month. So 38c a pound is like going to the Safeway and getting 16 ounces of London broil for a hundred bucks. But it wasn’t poverty alone that made the private markets such dysfunctional and unbustling places. Prices weren’t just high, they were bizarre. For one thing, they were all the same. Each babushkaed grandmother selling lentils was selling lentils for the same price as every other grandmother — no premium for quality, no discount for quantity and no haggling.I asked Marina about the beef. I said, “Isn’t the beef cheaper this time of the year? I mean, if you don’t slaughter cattle in the fall, then you have to feed them in the barn all winter, and, especially in a country with a grain shortage, I’d expect lots of people would be bringing cattle to market right now, increasing supply and driving down prices.”“No,” said Marina.“Now, pigs, on the other hand,” I said, “are raised on slops, and people are going to be tossing out food scraps year ‘round, so the price of pork would tend to remain constant.”“Meat,” said Marina, “sells for twenty-five rubles a kilo.”“Beef and pork, they both sell for the same price?”“Meat,” said Marina, “sells for twenty-five rubles a kilo.”“Fresh spring lamb?”“Twenty-five rubles a kilo.”“Stringy old mutton?”“Twenty-five rubles a kilo. Meat,” said Marina, “sells for twenty-five rubles a kilo.”There was another way to buy food in Kiev, at the state food stores with their long, scuffling lines at the head of which was nothing, just about nothing at all. There was bread, sometimes, that you could use as a medicine ball or a boat anchor. There were ten or a dozen five-gallon jars full of murky liquid with a few unidentifiable pickled things resting in the bottoms and other jars of the same kind which contained plain water. The sausages, when there were any to see, were a shock and a horror, looking like nothing but discarded sex toys. The produce was appalling. The potatoes resembled gray prunes and no other vegetable was distinguishable from compost.But the prices were right. The state store’s carrots — which could have passed as criminal evidence, wizened remains of a kidnap victim’s severed fingers maybe — cost 50 kopecks. And a kopeck is three-thousandths of a penny. The carrots in the private markets cost six times as much. Thus the Soviet economy is undermined by a kind of reverse black market from an anti-matter universe, a black market where it is legal to buy things you don’t want too cheaply.Every aspect of material life in the Soviet Union works this way. If you stand in line long enough the state provides goods and services. The services are out of service and the goods are no good, but food, clothing, shelter and medical care are — just barely — available. And they are hilariously inexpensive. The babushkas in the private markets don’t really have to sell you anything. They’re there to make money, not a living. If you don’t buy the food, well, then… fist/fist, forearm/forearm… they’ll take it home and eat it themselves, and you can stand in line for mummified carrots.“Return of the Death of Communism, part III — the saga continues”, from Give war a chance.The Soviets were left with no other policy than throwing money (subsidies) at a problem that wouldn’t seem to sort itself out — the only reaction a command economy knows, when the people lose their capacity to independently better their own condition.Whereas in China, the generational transmission of expertise had not been broken (1949–1978), the population were capable and actually willing to work in a free economy, and all that the Central Committee had to do was stop forbidding them from doing it. To quote from the linked paper:Deng Xiaoping’s famous description of Chinese reform as “fording the river by feeling for the stones” is not incorrect, but it was the Chinese people who placed the stones under his feet.Mikhail Gorbachev became general secretary of his party in March of 1985. By that time, he knew that the Chinese reforms were successful. His reforms, contrary to the popular narrative, closely mimicked China’s. He proposed to lease land to peasants, establish free trade zones, promote small cooperative businesses, and set up joint ventures. The difference was that Gorbachev imposed these changes from above, on an urban economy in which virtually all citizens worked for the state. Gorbachev’s reforms either were ignored or they were enacted with perverse consequences. Bottom-up reforms worked in China; top-down reforms failed in Russia.[…]Real reforms, whether dictated from the top or bubbling up from below, require a reform constituency. In the Chinese case, a large percentage of the population was recovering from the catastrophes of the Mao years. Rural dwellers, in particular, had witnessed the chaos of the Great Leap and had seen their parents and children die from starvation during the 1958–61 famine. They learned they had to take care of themselves. The urban elite had been ripped from the cities to a life of work and reeducation in the countryside during the Cultural Revolution, and a whole generation had been deprived of schooling. In the Russian case, the last famine lay three decades in the past. After the war, few people were executed for political crimes (political dissent became instead a mental disorder); the Gulag had been gradually dismantled after Nikita Khrushchev’s secret speech of 1956. All lived under the motto, “We pretend to work and you pretend to pay.”Surveys show that Russians were basically content with the system, comfortable in the bosom of their state enterprise or state farm.China had a reform constituency; Russia did not.Sometimes, it only takes for the grandson not to know grandpa’s trade and, when the center no longer holds, all things fall apart.