Talking Recession

Needles to say we are already in the recession. But there are some good part of the recession. First and foremost, it will kill inflation. We (American) spend more than we earn, consume more than required and leave way above our mean. Recession let people to look into this issue and force them to readjust. Recession will bring a best opportunity to invest in the equity market. And this recession will bring once in a life time kind of opportunity to invest. Recession will bring you the best deal that you always wanted to purchase. It bring less traffic on the road.

However, there could be lot of disadvantages - it will bring people out of job, so crime level increases. Companies will fail - every recessions, companies closes the door; especially - start ups (I mention as it is important in the valley), companies with negative cash flow, company with no cash on balance sheet, and company with huge debt. In this recession, you will not only see the bank will fail, but big company like Ford, GM and Chrysler will fail. Small business will hit the hardest in the recession. This recession is like in 90s, so most of the "Blog Reader" has not seen the effect of it. What we saw in 2001 was very tiny recession, and mainly on the corporate side which is 33% of economy. This one will be on both the side; consumer and corporate, so it will be deep and may last longer than 9 months. And this recession is global, which never happened.


Here is the excellent presentation from Venture Capitalist in the valley - Sequoia Capital. Which will tell you the picture of the coming month from the VC perspective.

http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation?type=powerpoint

Recession is good for the economics, it's a normal economic cycle. The only fear with the recession is when it turns out to be the depression.