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follow BayAreaObserver 2017 Jul 4, 2:35am
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There has not been a mantra thatâ€™s emulated a teenagerâ€™s go-to excuse of â€œBecause!â€ for both tactical effect as well as childish reasoning than the term â€œItâ€™s different this time.â€ And for nearly the last 10 years, that phrase has meant something entirely different to two distinct groups.
The issue at hand is that one side (i.e., â€œThe Valleyâ€, Wall St., and its sycophantic chorus of enablers throughout the financial/business media) is going to suddenly become aware that this once-reliable sword against any and all reasoning not only had an ominous double entendre-like quality, but also a double-edged sword. And the cleaving of reputations, along with investment dollars and sense, has only just begun.
So what about the other side, you may be wondering, since I said there were two? Fair point, and it is this: The other side, as weâ€™ll now call them (where you can place me if you wish), also understood that, yes, it was different this time, but not in the way that the prior believed. And that is the key, i.e., â€œbelieved.â€
The prior truly believed and embraced that it was different this time. In other words, fundamentals of any sort â€“ whether they be tried and true business metrics, paying customers, profits, net profits, or ______ (fill in the blank) â€“ were suddenly immaterial for measuring a business for what its valuation could, would, or should be.
Business 101 was reduced to: Get an idea, get funded, get listed, get outâ€¦ rinse, repeat. And if you didnâ€™t â€œget out?â€ Then the only metric that mattered is â€œeyeballs for ads,â€ i.e., spending (or losing) $100 million per quarter is perfectly acceptable, and even encouraged, as long as you can show 102 million eyeballs came for free. Why? â€œItâ€™s different this time.â€
This is what business, valuations, metrics, and fundamentals had now become, and again hereâ€™s the key â€“ they believed â€“ would remain forever more.
The others understood (and argued) that yes, it was indeed different, but not for any of the reasonings or defensive arguments put forth by the prior. It was different, but for only one key distinction: it was only made possible via central banks (the Fed, in particular) pumping $ trillions into the markets via one channel or another.
And hereâ€™s where â€œbeliefâ€ comes into play that works against the farcical belief â€“ that it was different.
Once the Fed and others began withdrawing or halting their â€œfree moneyâ€ programs, the first to suffer the consequences would be the true believers, disciples, and evangelists of the â€œItâ€™s different this timeâ€ paradigm. And guess what? That is precisely what has, is, and will continue to happen. Why? Iâ€™ll just use the abbreviation, IDTT.
When the Fed seemed ready and all too eager to continue printing, anything and everything seemed not just possible in â€œThe Valley,â€ but also for much of tech in general, especially for anything deemed disruptive. Fundamental business metrics be damned.
Losing $ billions quarterly? Have no fear â€“ raise a few $ million and declare youâ€™re worth $ billions. And if youâ€™re truly daring â€“ raise hundreds of millions and declare youâ€™re worth tens of billions! The more youâ€™re losing means, the more youâ€™re winning! Why? IDTT!
But, as I alluded to earlier â€“ then comes the dark side of the new â€œreligion.â€ For you canâ€™t have the good without the bad, right?
Full Article: http://uschnews.com/welcome-to-the-dark-side-of-its-different-this-time/
#Investing #Finance #SciTech #DifferentThisTime #Reality