It is always the same and it is totally different. It is when you feel that you have seen it before that you know you’re getting old. In 2000, we couldn’t get our road show done. In 1987, I watched from the trading room as our book lost $100,000 a minute. Each time it signaled an end of the cycle: the start of a prolonged down market.
I love looking at the 100 year charts of the economy. We cycle through growth and decline – expansion and recession – bull markets and bear markets. When you throw a ball straight up in the air its acceleration is constant but it is most dramatic when it stops going up and starts coming down. In each economic cycle I hear the rules have changed, everything is different this time. And each time economic growth surges and wanes.
Each time everything is different and everything stays the same. From cycle to cycle the key engines of growth change. One cycle it is steal, the next it is white goods, the next it is consumer products, the next aerospace, and the next technology. I was told today to buy GM because it has always been part of the foundation of our economic growth. I think they said the same thing about Bethlehem Steel.
In the last cycle the emphasis went from page views to revenue per user. The time before that, it went from revenue enhancement to cost savings. Each time it is the same: in expansion, value is in growing a business; and in contraction, value is in making the business more efficient.
What is happening economically is breathtaking and unprecedented. It is time to add circuit breakers, reforms, oversight. It is also the same as it has always been. In a down market: cash is king, value is in cost savings, and a good business is still a good business.
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