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Welcome To The Dark Side Of It's Different This Time

By BayAreaObserver following x   2017 Jul 4, 2:35am 461 views   0 comments   watch   quote     share  


There has not been a mantra that’s emulated a teenager’s go-to excuse of “Because!” for both tactical effect as well as childish reasoning than the term “It’s different this time.” 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., “The Valley”, 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 we’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., “believed.”

The prior truly believed and embraced that it was different this time. In other words, fundamentals of any sort – whether they be tried and true business metrics, paying customers, profits, net profits, or ______ (fill in the blank) – 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 out… rinse, repeat. And if you didn’t “get out?” Then the only metric that mattered is “eyeballs for ads,” 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? “It’s different this time.”

This is what business, valuations, metrics, and fundamentals had now become, and again here’s the key – they believed – 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 here’s where “belief” comes into play that works against the farcical belief – that it was different.

Once the Fed and others began withdrawing or halting their “free money” programs, the first to suffer the consequences would be the true believers, disciples, and evangelists of the “It’s different this time” paradigm. And guess what? That is precisely what has, is, and will continue to happen. Why? I’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 “The Valley,” but also for much of tech in general, especially for anything deemed disruptive. Fundamental business metrics be damned.

Losing $ billions quarterly? Have no fear – raise a few $ million and declare you’re worth $ billions. And if you’re truly daring – raise hundreds of millions and declare you’re worth tens of billions! The more you’re losing means, the more you’re winning! Why? IDTT!

But, as I alluded to earlier – then comes the dark side of the new “religion.” For you can’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

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