Every bear market starts with the same picture.
It’s a bunch of guys, average age 40. They’re staring up in horror. These days it’s a flat screen. Before that it was a TV screen and, before that, a blackboard high over their heads.
It’s why we never learn the lessons, and positives, from a bear market.
It’s always different guys. The guys who could have taught the lesson have aged out.
Even our longer lifespans don’t help. There are lots of people in today’s market who remember the bear markets of 2000-2002 and of 2007-2008. Most have been shunted aside for younger faces. It’s part of the rotation in market cycles. The market doesn’t want a memory and eliminates it.
But just for a moment let’s pretend. I’ve been a reporter for 45 years now. I’ve seen several recessions, several bear markets. Each is unique but each carries the same lessons.
Diversify – Everything can go down in a bear market, but some things go down less. That’s why you diversify. Growth stocks fall hardest, then value stocks. Most bonds, especially government-backed bonds, continue to pay off. So do most corporates. As interest rates moderate, these make money.
This Too Shall Pass – Bear markets end. But standing pat doesn’t work, either. The companies that lead the next wave up are different cycle to cycle. I’m a tech reporter, and there’s constant churn as new tech replaces the old. If you don’t keep up your technology debt grows-and-grows until it crushes you.
Ethics Matter – Some people are honest in bull markets, others aren’t. The bear market sorts this out for us. I’ve been wrong on some things, but most of what I’ve written (including the negative stuff) has come true.
Anything Can Be Overvalued – A lot of “disruptive” tech is flaming out. But all tech has fallen, even the good stuff. The way to make money is to know which is which. Both growth and earnings matter, and so does size. Paying 10-20 times revenue for anything is foolish, even if it works for a while.
Transparency – We need a lot more of it. We need scoreboards. Here’s mine. I haven’t looked at it in some time, but it’s pretty good, even if they have my employer wrong. Can’t believe I’ve been doing this a decade. I was a full-time tech reporter until 2010.
Look to the Future — I have three big trends for the current decade. I first wrote about them in late 2019. Let’s review. The Death of the Oil Patch, necessary if we’re to survive. The Machine Internet, turning every switch into a meter, and tying the meters together with software. DNA as a Programming Language, using our cloud computing to expand our knowledge of disease and all living things.
You’ll notice there’s no metaverse here. No Web3, no AI. These are sideshows. They could result in good applications. They could become part of larger applications. What matters is to what degree they push us along on the main themes of progress. This is where new value lies.
