Some thoughts about the market and related issues: (apologize for length, rambling and typos in advance)
Last year I would have been firghtened by what is happening in the DOW, and the NAZ would already be in the tank even more. This year, I (and the NAZ) are reacting very differently.
One reason. Last week I heard Geoffrey Moore give a talk based on his new book, soon to be released.The theme is how companies will survive and thrive in the Internet economy. The way the DOW is reacting it is as if it heard his words.
One of his predictions is that the mother of all downsizings is coming. That whatever downsizing we have seen in the old economy in previous years is going to be dwarfed by what is coming.
Why? Becuase old economy companies will need to radically alter how they do business to increase revenues and make money in the Internet economy. He also gave a good rationale for why "valuations" are so low for so many of the old economy companies.
In case I thought this would take a while, look at the news today about the three auto companies creating a joint procurement site. Amazing! something few of us could have predicted (I know I would not) and more importantly, something we will have a hard time right now forecasting the impact of.
He also gave a very clear rationale for the way valuations seem so skewed towards new economy companies; why they are values "times revenues."
All in all, I am finding (a lot sooner than I expected) that it is helping me to keep what is going on in perspective.
Another point I just heard is the fact that higher interest rates are going to hurt old economy companies more than new economy companies. The former are currently more dependent on borrowing while the latter can raise capital in the equity markets.
On this point, last night I attended the March meeting of the Berkeley Entrepreneur Forum (at UC Berkeley Business School). At the start of the evening people can come up and give two minute elevator speeches about the entrepreneurial projects they are working on and ask for what they need, which is almost always money. Last night three of four speakers asked for people (execs, techs, etc.) and not money.
This I beleive has been a growing trend - the money is there for these projects/companies. Now can you imagine the reaction of the stocks of some of the old line companies if they came out with a big stock offering to raise capital?
Things are definitely changinig and the stock market is a great, realtime barometer. I am holding on for the ride. |
