Even successful people need something to worry about. Those who think current interest rates and inflation will continue to infinity and beyond are not students of financial history and probability.
I think it's just human nature, in general, to think that whatever the current trend is, will keep going on indefinitely. And, sometimes you get just enough anecdotal evidence to back that up.
I remember Thanksgiving, 2008, talking finance with some relatives. Even though the official bottom of the Great Recession was March 3, 2009, I had actually bottomed out around Thanksgiving. Anyway, my relatives were moaning and groaning about it all, and I just said, well, I've already lost half of it, how much lower can it go? I also said something to the effect of, even if I lost another 50%, it would be off of a much smaller number, so it doesn't hurt as bad. Some of those family members were chuckling at my apparent "ignorance" But, by roughly Thanksgiving 2009, I had made back most of those losses. My net worth was actually hitting new highs, but I was still technically "not made whole" yet, as I had been continuing to invest while the market was down.
In a similar vein, back around 2005 or so, I caught one of my co-workers giving out bad advice. She said "wanna double your money in four years? Buy a condo in my neighborhood!" And, indeed they had doubled, roughly, over those past four years. But what she wasn't taking into account was that, in our area, just about EVERYBODY's homes had doubled in value during that time. And, that pace just could not keep up. Her condo was probably worth about $250,000 at that time, and that was buoyed partly by low interest rates and easy financing terms. However, doubling from $125K to $250K is one thing, but doubling again, to $500K? Just not sustainable.
My co-worker was also the type who would cash out equity whenever the value rose. In the end, around 2018-2019, she went into foreclosure. Sad thing is, this was a condo that she had paid about $90K for, back in 1992. It took several years for the foreclosure process to work out, but a week or so ago I noticed her condo pop up in the real estate listings. The listing mentions "great potential", which tells me it's been trashed. And also "cash only" and "must pay off existing liens." If my co-worker had just left her mortgage alone, she would now have her condo, free and clear. But instead, she's getting kicked out of it, with nothing to show for it.
As for that "double your money in four years?" Well, it's listed for $260K. I looked up recent sales in that neighborhood, and comps for the last few months are around $300-320K, so again, I'm guessing her place is trashed. Just to keep up with inflation, that $250K in 2005 would need to be around $381k. So, yep, most trends don't last forever.
