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Most likely it's panic about their own short-term losses in the market. Headlines like this (below) have scared them into a kumbaya-doombaya share-our-pain sess

by sabat 18y ago

Most likely it's panic about their own short-term losses in the market. Headlines like this (below) have scared them into a kumbaya-doombaya share-our-pain session with their underlings. Truth is that the Dow can drop -- mainly out of emotional overreaction -- but if companies are genuinely producing value, then it will correct upwardly. A sudden, huge loss in the market like we've been seeing is never a sign of anything except emotion. Actual bear markets are signaled by trends, not jumps. Dow falls below 9,000 Stocks slumped Thursday afternoon with the Dow falling below 9,000 as the Treasury's eye on buying stakes in struggling banks failed to reassure investors amid the ongoing credit crisis.

skmurphy 18y ago
The guys at Sequoia, whatever their flaws, don't panic easily and wouldn't call all of their portfolio CEO's together to issue this set of warnings--which will lead to layouts and cutbacks of all sorts--if they didn't believe that it was necessary.
- sabat 18y ago
  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.
  - hugh 18y ago
    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_Secular%20Bull_Markets.htm 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.
    - nostrademons 18y ago
      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.
      - Retric 18y ago
        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.
  - skmurphy 18y ago
    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.

by sabat 18y ago

skmurphy 18y ago

The guys at Sequoia, whatever their flaws, don't panic easily and wouldn't call all of their portfolio CEO's together to issue this set of warnings--which will lead to layouts and cutbacks of all sorts--if they didn't believe that it was necessary.

sabat 18y ago
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.
- hugh 18y ago
  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_Secular%20Bull_Markets.htm 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.
  - nostrademons 18y ago
    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.
    - Retric 18y ago
      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.
- skmurphy 18y ago
  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.