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Inflation and greed contribute mainly to recessions. Both are pointless.
-----Original Message-----
From: francine hardaway [mailto:francine@stealthmode.com]
Sent: Thursday, December 07, 2000 7:12 AM
To: azipa@egroups.com
Subject: [azipa] Why it seems as if there's no money around all of a
sudden
Don't run your credit cards up this Christmas, because you'll never get
them paid off next year. When historians look back on the Millennium,
they will probably find that the recession started in the year 2000. It
began mysteriously, in the middle of an economy growing wildly, with
more than full employment and low inflation. It will continue for a
couple of years, long enough to destroy many young millionaires, and
then slowly reverse itself, ending just as mysteriously as it began.
This will happen despite the tremendous advances in technology to which
we've all become accustomed--the instant access to information, the
online trading, the global economy. In many ways, the New Economy is
acting just like the old economy: not very different from the stock
market recession of the 70's, in during which I owned a single mutual
fund for ten years without gaining a dime, or the real estate recession
of the 80's, in which land lost sixty to eighty per cent of its value
within a six month period, wiping out many of my clients and friends.
Last year, when the stock market was soaring for the second year in a
row, all the Red Herring-type magazines announced that there could never
be a recession. But having seen several recessions before, I was
skeptical. It isn't a surplus of microprocessors that makes a recession,
or a shortage of oil. What makes a recession?
We do. A recession is a spiritual event: a communal loss of faith. I've
learned to be an early adopter of recessions.
About three months ago, I took all my short-term money out of the stock
market. Why? Because I was no longer getting the astronomical returns I
had grown accustomed to, and because someone offered me a better
investment alternative. I wasn't *losing* money; I just wasn't doubling
my money every couple of weeks.
I had just come from George Gilder's Telecosm conference, at which
everyone talked glowingly of the emergence of the all-optical network. I
felt comfortable that I understood the technology. I work with companies
in this space every day. In my mind, I knew that telcos would have to
upgrade their equipment and the Internet was only beginning as a
commerce channel -- that broadband was coming and bandwidth would be a
commodity.
I also knew, although with less first-hand experience, that the
sequencing of the human genome would lead to breakthrough medical
advances in both pharmaceuticals and medical devices.
And yet, I decided to switch my money to first deeds of trust: mortgages
on people's homes. This is the oldest economy investment I could have
found, short of investing in Phelps Dodge or Archer Daniels Midland.
It's 'cuz I lost faith in the market to give me the kind of return to
which I had grown accustomed.
Just as I was taking money out of the market, a few other early adopters
did as well. The market fell a little. Then the media jumped on the
market's "correction," and it fell a little more. Then the non-election
came, and it fell a little more. The crisis of faith is upon us. We have
crossed the chasm. All of a sudden, the same magazines that told us we
would never have another recession are proclaiming its imminence. If you
look at them, they're thinner (this is not a bad thing for the reader).
The advertisers, too, have leapt off the bandwagon.
And so the dominoes fall, assisted by the media. And soon we get to the
most terrifying part of a recession: the trickle down effect. You think
it could never affect you, and then suddenly you are laid off, or your
company goes bankrupt, or your orders slow dramatically. The worst of
the recession is when the economy starts to rebound, but you're a
lagging indicator and you're still broke when the other guys are coming
back. That's humiliating, but it's the most common occurrence.
So a technology-induced recession hits the technology sector first. But
sooner or later it will hit the luxury car dealers, the cosmetic
surgeons, the cruise lines, and the divorce lawyers. From experience,
I've learned that to be an early adopter of recessions, you should go
to cash right away. You then sit there, without a ton of credit card
debt and business leverage, and wait. Sooner or later, it "finds the
bottom," and bounces. You catch it going up because you have the cash
to invest.
Five years later, a new group of young tycoons has come of age without
ever having experienced a recession. The guys who got killed in
2000-2001 are now wizened and wiser, even though they may only be thirty
years old. You have invested wisely this time, and take your money off
the table.
And the whole thing begins again.
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==AZIPA=========================================================
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Searchable list archives: http://www.egroups.com/messages/azipa
To unsubscribe, send us an email mailto:unsubscribe@azipa.org
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Arizona Venture Capital Conference 12/13-12/14/00
http://www.azVentureCapitalConf.com
Strategic Research Institute Web Launch BootCamp 1/30-2/2/01
http://www.srinstitute.com/cx326
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