This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Definition of 'Insanity Cubed': Opinion

What do we see instead? Employing the same Cast of Clowns who have already failed repeatedly to remain in charge of executing "the plan" -- expecting that this time the Clowns will perform admirably. Employing the same Cast of Clowns to repeat a failed strategy that is universally understood to be the precise opposite of what they should be doing.

Alternate definition of insanity: Expecting the same people who screwed things up originally to "fix" their mistakes ... by continuing to make the same mistakes.

In mathematical terms, we are now at "insanity squared": repeating a failed plan, with the same group of failures put in charge of repeating the failure. But it gets much worse than this still -- as is always the case with any multiplication function.

Let me introduce you to the exponential curve.

Readers are generally familiar with "linear" functions (or charts): These are mathematical progressions where the rate of change remains relatively constant. Conversely, only those with a background in mathematics are generally conversant with exponential functions.

This is a mathematical function that doesn't merely accelerate over time, but where the rate of acceleration itself continues to accelerate. Exponential curves are the mathematical representation of the concept of "unsustainability." Put more bluntly, all exponential curves end in disaster, and there can never be an exception to this.

Examples will quickly illustrate this point. In the animal kingdom, when any animal population begins an exponential decline, it is 100% certain that it will become an "endangered species" in the near future. From that point (and despite our best efforts) it is nearly 100% certain that the species will become completely extinct.

Lest anyone suffer from the delusion that only downward-pointing exponential curves lead to disaster, what happens on the rare occasions when animal populations experience an exponential growth? Massive over-population. Rapid destruction of the entire food supply. Followed by mass-starvation.

Want an example of an exponential curve in the world of human commerce? Can anyone say "bubble"? Bubbles generally feature two exponential trends: Exponential increase in prices and exponential increase in the level of ownership of that asset. Can anyone provide an example of a bubble that ended well?

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.99 0.00%
FB $102.01 0.00%
GOOG $682.40 0.00%
TSLA $151.04 0.00%
YHOO $27.04 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs