Dana Blankenhorn

How to Adapt to Accelerating Change

The chief theme of my working life has been the pace of change accelerating, under Moore’s Law.

We’ve all had to get used to it, but until this decade economists didn’t.

Now they must.

The pandemic has shown just how quickly economic behavior can change, and how inadequate our tools are for adjusting to it.

Just since the start of 2021, we’ve seen a tech-driven work-from-home economy replaced by a great reopening, followed by huge demand for goods, then workers, and now a giant stop sign as markets have saturated. But fears of recession may be overdone as services are replacing goods in the family shopping cart.

Worthless, Worth Less, or Bargain?

There are three types of tech stocks today.

Companies that aren’t doing anything real are worthless. I’m talking about crypto and NFTs, I’m talking about all the metaverse stocks without a business model. For these companies it’s 2000, it’s Gotterdammerung. Just as was the case then, there’s a lot of stuff that was valued based on the assumption of no limits.

It was easy to find the moment it all came crashing down last time. It was January of 2000, when Time Warner “bought” AOL in a deal that gave AOL shareholders more than half the resulting stock. This put an upper limit on the value of Internet stuff. It was all downhill from there.

The big moment this time was the Crypto SuperBowl. Matt Damon read a ridiculous script that equated buying cryptocrap with going to Mars. It was at that moment, during a game played in SoFi Stadium (another name due to crash) that we realized how artificial it all was. Smart people got out.

Inflation and the Bear Market

Inflation has created a bear market in U.S. stocks.

Inflation this time is a global phenomenon. It’s caused by Russia’s war, China’s lockdown, and the impacts of climate change. The Administration can’t beat it. The Fed can’t beat it. Technology can fight it, the high dollar can offset its impact, and a little belt-tightening won’t go amiss either. But in the end we’re at the mercy of global events.

In a bear market, fear replaces greed. There is fear this morning that the Ukraine war will drag on and force concessions. There is fear that China will invade Taiwan.

I believe the fear is misplaced. American aid should let Ukraine go on the offensive next month. I don’t think China will invade Taiwan.