Things Will Develop In The Opposite Direction When They Become Extreme

There is an old saying in Chinese philosophy, which says “Things will develop in the opposite direction when they become extreme”. 

I am not an expert in ancient Chinese philosophy even being a Chinese myself (I am more of a fan of Western analytical philosophy), but most Chinese people would know this.  When things become too extreme, they go in reverse. 

Financial markets are just the same.  When prices of a certain assets go into an extreme, they will reverse.  That’s when a bubble bursts, for example. 

The universal hatred of the US dollar, for instance, has become an extreme in the past few months.  Among with many other reasons that I have explained, the market is going in the opposite direction.

The reversal was not unforeseeable, and you don’t need a conspiracy to explain it.

This article originally appeared here: “Things will develop in the opposite direction when they become extreme”

Also sprach Analyst – World & China Economy, Global Finance, Real Estate

Related Posts

  • Hong Kong: Inflation Eased To 5.7% In August
  • Risk On/ Risk Off, Carry Trade, And US Dollar
  • China Real Estate: A Random Reflection
  • Japanese Yen And Its Implication For US Dollar

Read more posts on Also Sprach Analyst »

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at