Re:A CEO's Sequoia Meeting Notes
by sabat on Thursday October 09, 2008 @06:08PM
(#328328)
They may not panic easily, but they certainly are panicking. I'm sure they believe it's necessary, but that doesn't make them wise. They're human, and they can't see the future any more than we can. If things really are as dire as they fear, then most of their companies should sell off assets and shut down. Most of them wouldn't survive a 15-year depression, even if they're frugal. Cooler heads would just shut them down.
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A 15-year secular bear market is not the same as a 15-year depression, or even a 15-year recession. It's fifteen years of overall crappy growth, not fifteen years of straight negative growth.
The last fifteen years, you'll note, have been especially good: only one minor blip in 2001 since the last recession ended in 1992ish. We can't expect that kind of thing to last forever.
According to this analysis:
http://www.amateur-investor.net/Secular_Bear_Markets_vs_Secu...
there were secular bears (as measured on the Dow) from 1906-1921, 1929-1949 and 1966-1982. No reason there shouldn't be another one now.
On the upside, this means relax. It doesn't mean we're all gonna die. It just means we might have to live though the 1970s again, except with better clothes and worse music.
Re:A CEO's Sequoia Meeting Notes
by nostrademons on Thursday October 09, 2008 @08:19PM
(#328424)
IMHO, the secular bear market started in 2000, and we're halfway through it. The peak in Oct 2007 just barely bested the market peak in 2000, and then like a month later started its slide. Right now, stocks are where they were in 97/98, so that's 10 years with zero overall growth.
You're forgetting about dividends and inflation.
The stock price is based on what people think is going to happen if look at our GDP and savings rate to see if there is any economic growth.
I credit them with a lot of experience and access to a lot of good information. I don't know why you believe that they are panicking in a week that the DOW has dropped about 16%: this will weld the IPO window shut and limit the value of any acquisitions that occur. If their companies are cash flow positive then there is no reason to sell off assets, but if they need more funding to survive it may not be available. If they were to shut them down and return the funds to their limited partners that would be the end of Sequoia: their partners expect them to earn an above average return with the risk capital that they have invested. Some investment firms, Sequoia likely among them will find a way to earn a positive and above average return from their portfolio of investments. They can't do that if they liquidate all of their holdings.