DISQUS

brooksjordan · 1 year ago

Timely post, thanks.

Andrew · 1 year ago

Well said! The news outlets have been citing the great depression so much and people just don't know how bad it was back then. The market took a dive in '29, but it wasn't until poor government oversight kicked it off a cliff in '34. It took 4 years to get that bad and the government today is doing the exact opposite. Instead of tightening the money supply and holding back, Uncle Sam and the rest of the world are flooding the system with capital and things are beginning to turn around. Hopefully it works, but it sure as hell isn't the depression.

CB · 1 year ago

1,000% agreed, Roger. 1,000%. This is the time for smaller players if you can gut it out. I would argue that the risk spread of 70% of the S&P vs. a startup is at an all time low from an investors point of view. Why?

1.) Great talent at a cheap price is much more available
2.) You can execute far more quickly and cheaply and adjust your product / pitch to market conditions
3.) If you have a product that can save money, reduce headcount, reduce risk, increase transparency, etc. you are golden
4.) People will make emotional ROI buying decisions, a critical opening a good salesperson can take advantage of. Incumbent enterprise customers will be much more open to disruptive technologies.
5.) Larger players are trying to preserve what they have but will have their revenue base cut in half. It will take them time to restructure/reprice to the new environment

Frankly, like you Roger, I'm surprised by the number of pro's with their heads in the sand. I can't think of one conversation with a VC in the last 6 months that gave me an indication they had the foresight to salt away some cash to take advantage of the opportunities here even though this storm has been brewing for over a year.

To my entrepreneurial bretheren ... stay frosty and execute, execute, execute ... and, turn off theTV.

CoryS · 1 year ago

Read a similar sentiment from Stratfor posted by InvestorInsight.com:
"The United States is a $14 trillion economy with a potential problem amounting to $1-2 trillion (and probably far less than that). If the government intervenes, it will create inequities and imbalances in the system. But between the size of the economy and the government printing press, the problem will be managed -- particularly because there are underlying assets -- houses -- that can be monetized in the long run. The gridlock in the financial system will undoubtedly create a recession, but there hasn't been one for seven years and it's high time."

So, we're in for a recession and maybe not the end of the world. Thanks for noting the media's place in all of this.

David Merkel · 1 year ago

Well said, Roger. And maybe, just be grateful for whatever good things we have away from the markets. I thought about that this morning, and it gave me new energy and a touch of optimism amid the gloom.

fendien · 1 year ago

"it may well be that the media is playing a larger role in fomenting the historic levels of market volatility we've witnessed over the past 30 days, more than anyone could have imagined."

this is a very interesting point. you mention to put the papers down and chill out a bit. but beyond the average joe who is spooked and perhaps pulling a lot of investments out of the market based on the news he is surrounded by, what do you think about these people who you've "always believed to be level-headed, stable, cool-handed money managers are acting truly bizarre. One day they're depressed. The next day they're hopeful."

do you think that first these individuals need to stop their emotional volatility before the average guy can try and get a grip on the economic events currently transpiring. wouldn't experienced money managers understand cycles and how the media will sensationalize events like this and try to use this as an opportunity to profit, rather than run with their heads cut off?

infoarbitrage · 1 year ago

i agree with your last paragraph, but sadly money managers are people, too, even good ones. the reality is that few are truly great and able to subliminate their human foibles when making investment decisions. that's why asset allocation is so much more important than manager selection.

Mike in the Midwest · 1 year ago

Roger, It seems like the media (blogosphere included) has been trying to call a "capitulation point" now for some time. Just go to Google trends and type in capitulation and you'll see what I mean. Maybe i'm still too young, but doesn’t the fact that people believe capitulation is near prolong its inevitable occurrence? How will we ever get a wash out when the media keeps calling a market bottom, investors flood back into the market, we get a short covering rally (dead cat bounce as you alluded to earlier this year), and a fresh new wave of "oh by the way now we're going into recession" media coverage ensues?

I'm not mad at the media; it's their prerogative to sell the news. But why are we (retail AND institutional investors) still stupid enough to believe in the fallacy of calling a market bottom? If there are 2 things that we should have learned so far from this crisis it’s that we’re NOT smarter than the market and that irrationality knows no boundaries.

Sorry for the long post!

infoarbitrage · 1 year ago

mike, i think your observations and comments are quite keen. thanks for taking the time to post. i am frequently mystified by the same things you cite in your comment.

Ethan Bauley · 1 year ago

We need a market for information...the universal financial talking-head karma system.

Someone needs to make the karma API

I can see StockTwits plugging in ;-)

efliv · 1 year ago

There's nothing wrong with 24/7 media in theory. The problem lies with the advertising model, which incentivizes sensationalism to increase ratings.

infoarbitrage · 1 year ago

i completely agree. i think access to news and information is terrific. it's just that so much of it sucks because of the reason you mention.

ceonyc · 1 year ago

It's sad that when action, like voting or taking care of one's health, is a good thing, people act lazy, but when relaxing might be the best approach, you can't tear people way from the screens and they keep randomly pushing all the wrong buttons w/o a strategy.

Helena Shaw · 1 year ago

Right on. Most of the commentators on cable TV are not journalists, they are sensationalists!! And they are ignorant about the entire situation. That is the worse part. Some of the things that they say are so stupid.

It really drives me crazy when they whine about when this is going to be over. They still don't get it. They created the majority of the backlash from Americans about the bailout by not explaining it properly to start with. Rather, they chose to jump on the out rage bandwagon and feed off of it.

Then, once the bailout passed, they started saying stupid things like, 'okay, the bailout has passed, why aren't things getting better yet? They are so stupid!!!

Cass · 1 year ago

Was interested to read your account from within the industry of how even seasoned money mangers are reacting in a volatile fashion. I agree that the media is at least one factor in provoking the current volatility, especially considering the our present unprecedented degree of exposure. Wrote a blog post that mentioned this article; it would be great to know your thoughts: http://mediageekery.blogspot.com/2008/10/new-re...

R Dow · 1 year ago

While I've enjoyed and profited by following Dr. Doom (Roubini) for the past 18 months, when I read about his recent jetting around the globe spreading his "cheer", then perhaps all of this hype is indeed getting a bit overblown.

jungleg · 1 year ago

Hi Roger,

A post by Media Geek Girl (http://mediageekery.blogspot.com) brought me here, and it's amazing how we're in the same page, as you can read in my post "Who do I blame for the economy downturn? The Web!" http://jungleg.com/2008/10/who-do-i-blame-for-t...

I think not only mass media, but influential social personalities are partly responsible and can help to turn around this dark sentiment.

Thanks!