Is the Economy in a Moment of Peak Clarity?

Regular readers of this blog know that I think Peter Thiel is a genius. Peter’s talk at last year’s Singularity Summit [watch it here] is a classic and I was psyched to see Ben Casnocha quote him back in September:

On the Internet boom, Thiel wonders whether the late 1990’s mania actually represented enlightened thinking:

What if March 2000 in some sense represented not a peak of insanity but a peak of clarity, and that at the peak of the boom people could actually see the furthest, and what they could see was that in the long-run, in the next 20 years, 30 years, the entire old economy was going to be doomed and that all sorts of businesses and ways of doing business were no longer going to work? Therefore, and this is the tricky part, you had to bet on this one way that was going to be the way out. And that was the internet.

What I want to throw out there is this: What if our current economic situation represents another moment of peak clarity? What if WE’RE NOT actually in a panic or crisis, but in fact, the market is acting completely rationally? Could the market in essence be demanding we throw out old processes and business models? Could it be telling us that we’re at the beginning of a new era, rather than at the end of some zero sum game? I think so.

Take a look at the following five-day chart:

What you see is that even while the DJA is currently down 600-800 points again, it’s not our innovative companies that are getting rocked (as hard). Apple and Google are starting to hold. General Motors on the other hand is still getting slammed. GM is a disaster of a business. It’s been troubled for years: should we really be surprised that it could crater to zero?

In my opinion, this isn’t a panic at all. The only crisis is perhaps one of confidence, confidence in America’s ability to step-up as the innovation leader and to lead the world into a new era of business. The glory days of GM, cheap oil and irrational exuberance are over. I’m tired of all the fear propagating. Although it’s painful we must all recognize these events for what they really are: an opportunity to move forward, not backward. We need to invest in businesses that are innovation leaders and this extends outside of investing in publicly traded companies.


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