Or 1. Convince people stocks are going to go down. 2. Mass sell-off. 3. Now stocks really are going down.
I think this is just a self-fulfilling prophecy where business leaders convinced themselves a slowdown is coming, causing them to take actions that will result in a slowdown. A lot of what happens at the CxO level is looking around at your peer companies and imitating what they are doing.
Stocks are not the economy.
We literally have a cold war with China escalating, a hot war in Europe (which we aren't directly involved in..yet), all after years of loose monetary and fiscal policy, inflation is at generation highs, with rates rising and housing relating prices crashing, and on and on...
Maybe HN needs some more serious economic analyses posted if people think all of this is caused by a 15% fall in SPX.
I'm not saying I know that's what's happening. But I wouldn't be surprised.
As for high flying tech (cloud, etc) - yeah, probably too much speculation there.
Powell has been saying for months he wants people to save and pull cash out of the economy.
This is intentional because DC decided tech workers were undermining Washingtons of course most correct and immutable control over agency.
Why if all these people kept earning and could acquire more assets and live comfortable, politicians and uber rich would have no place in our society.
The fundamentals must be maintained. Fundamentals being we serve their goals, not the other way around.
If you want to go on a specific tangent involving dead men’s philosophy, be my guest. I was merely attempting to illustrate how apt the bank run analogy is.
Pet conspiracy theory: boom/bust cycles are not only inevitable, but desirable to some extent. If the housing and stock markets didn't undergo catharsis every so often, new/beginning investors wouldn't be able to buy in.
The signs are usually telegraphed well in advance, but not by collusion or intent. A self-organizing conspiracy of sorts. It could be interpreted as "herd mentality" but I think that oversimplifies what's really going on, and why.
I wouldn’t call this a conspiracy theory at all. The founder of Bridgewater Associates, the largest hedge fund in the world, spent time and money to publish this idea in various forms. I learned about it from here:
There’s more to this idea—-the long term debt cycle—-but the premise is exactly what you stated. There are benefits to both the boom and bust phases of the economy.
1. Hype around new technologies is sometimes warranted. Electrification, for example. It wasn't clear how long it would take for these weird new internet companies to really start turning a buck, but after a few years spreadsheet parameters were updated and the whole financial industry saw the writing on the wall for most web companies.
2. Many profitable and completely unfunded web companies primarily received their funding from other web companies that were. This set off a cascading reaction of bankruptcies and massive layoffs. Advertisers, publishers, tool makers, and many others were in this second category of legit business that lost the vast majority of their customers.
One of the downsides of an inflating currency is that there is a general feeling of "well I have to invest my money somewhere!" that is hard to overcome and leads to bubbles until the sky starts falling, so I agree with you that psychology is a factor; but the fundamentals still dominate in the medium to long term.
...also HN today kind of looking like fuckedcompany[1] back in those days.
My take away is that we may have a mild recession, but the likelihood of a massive recession is a lot higher than it has been in decades.
Which companies go bankrupt now?
Then, it was because {value} = {idea} + {Internet}.
Except nobody knew how much value the {Internet} part added, because the Internet wasn't done solidifying in terms of capability (e.g. "AJAX? What's that?") or connectivity (PocketPC!).
Now, the Internet is a pretty well-known quantity.
So while Uber and Lyft and Masayoshi Son's portfolio might be massively overvaluing things, the fundamental nature is well understood.
Some stupid companies will die, but there are lots of companies making actual money doing actually useful things.
And the primary casualties of the dot-com bust are all so consolidated that the tools-impact will likely be lesser too. Amazon/MS/Google aren't going to go bankrupt over softer cloud demand.
Both the bubble and the crash are almost purely psychological. It's greed and fear coming in waves. There can be technical fundamentals, but to take the example of Bitcoin, you don't need any technical fundamentals. Humans can create and destroy value on top of a very complex random number generator.