I understand someone’s concern about the market. We’re making more money on good days than we used to in a decent month. Is it too good to be true? None of us knows what’s coming around the corner. Most of the difference right now between panic and calm isn’t knowledge IMO. It’s experience. Many of us older farts (or more experienced younger farts) have played this team before. We know that whatever happens will happen and there’s nothing we can do about it but try to plan ahead as much as we are able, which sometimes seems like way too little.
But whatever’s coming will come regardless of what we think, guess, prognosticate, believe, publish, read, preach, gossip or hear at the pub. So to the worriers among us (hey, it’s ok; we’ve ALL been there) I would like to point out that 1) I know no more than you about what’s headed down this highway and neither does Saul nor Warren Buffett. 2) It’s coming for all of us—at the same speed, at the same time—and we’re all in this together. 3) Lastly, the time to get interested (nervous, if you must) is when the market has dropped a good 10-15% in a short time. Then it’s time to decide if we think (we don’t know!) the market will continue to fall or bounce right back up. Doing anything early will make us look like fools and our portfolio losses will feed Wall Street “professionals.” Personally I don’t like to feed those guys.
Regarding all the secondary offerings, there could be a multitude of reasons, including the theory that this is the top of the market. But before we get too riled up, consider the following, just so you understand the other side of the argument:
Scenario:
• You’re the CEO of an up and coming company with fast growing income, HQ in the US.
• Interest is near historic lows.
• Technology is growing fast and your company runs with technology.
• The administration is hell-bent on making businesses more profitable.
• Unemployment is low and falling.
• Sales are growing so fast your only problem is keeping up production (and the huge related expense.)
• Everything’s going great, but you’re the new guy on the block and you know without doubt that your competitors are all out to snipe you at the earliest opportunity.
• Your employees are fully onboard. They almost live at your office now, they can’t do any more.
• You’ve stretched your assets, your manpower and your future plans to the limit.
• But you see your competitors hiding in the bushes
… and you know that there will most likely never be this perfect storm in your career. Whatcha gonna do?
One thing you could do is … are you ready? You could lift some burden and raise capital for free. How, you ask.
Ha. Look at the news. You KNOW how.
Or, it could be a market top. I don’t know. I almost said I don’t care but that wouldn’t be true. I do know that when this train does slow—and it will—it will be nice to make buying decisions on some fundamental valuation platform that makes sense on a historical level. Because I’m an old fart. But experience hasn’t taught me what’s coming, hasn’t given a hint. But I know one thing I can NOT do. I can NOT act on emotion. I tried that once. Or was it a hundred times? I forget. Probably because it hurt so bad.
If you have to learn things the hard way, I understand, so go for it. Take your profits and your lumps. And when you do that enough times to get just enough experience, you can come back here and do a much better job than I in trying to save someone else the pain of learning from personal experience in another cycle that “we’ve never seen before.” It’s valuable, but it talk about a high price, and you thought SHOP was expensive. Phew!
Dan