Gut Check Time...EVERYBODY!

This week was a reminder that we are in a bear market.

The S&P had one of it’s best week ever and I think one stock hit an all-time high (luckily mine IBKR). The rally came after the worst January ever.

Gold was whacked, oil was whacked, Micro’Whatever’ was whacked. Banks, Homebuilders and Yahoo rallied…all the shit that everybody was now short. That’s a bear market rally.

As my friend Cole pointed out to me with this Business Week PANIC story about housing – the housing bottom could be in. That would truly be amazing in that noone would believe it. For the housing stocks, just maybe (because of price), but from a time perspective it sure seems short.

That would be fine with me. I am not short (other than SKF) and won’t be stubborn. If we want to go higher, stocks will start hitting highs, no one will believe it and I will start adding them.

The venture capital market is not immune to the overall economy right now either. The fact that Microsoft would do a fucktarded big dopey mash of two behemoths (show me when something like that worked) is further unsettling. I think it was Time and AOL that got together at the wrong time for the markets as well.

Bill Burnham points out that this type of merger would hurt Silicon Valley and acuisitions in general.

Here is what Fred is saying :

I am not saying the M&A market is going away, but I think there are several factors that might slow it down. In addition to one less mega Internet compay, we also have IAC in an unstable situation that could well result in it (or part of it) getting gobbled up. And the big media companies like NBCU, CBS, News Corp, Disney, Viacom, etc have never really been able to compete with the valuations that the big Internet companies were paying. At times they’d step up, like News Corp’s brilliant buy of myspace or CBS’ buy of last.fm for $285mm.

I think all of us who start or finance consumer oriented web services should be thinking a bit differently about exit scenarios now. It’s time to think long term. Back in 2000, when the market broke, my partner Jerry said to me:

Now we’ll see who is doing this for the money and who is doing this for the passion

We had quite a few companies in our portfolio weather the storm from 2000 to 2004. The ones who did were in it for more than the quick flip. I think it’s time to do that same gut check again.

Buckle UP!