Yogi Berra was credited with saying, “It’s like déjà vu all over again.” The market rout this afternoon (Tuesday, August 25, 2015) felt a lot like 2008. How should a business owner react?
While the 2008 crisis was triggered by credit issues in the United States, today’s crisis trigger is China and a plunge in commodity pricing. Some of the commodity price pressure was also caused by a China slowdown, so at least for now, China is the epicenter of the crisis, rather than the US.
If you are a business owner considering selling some or all of your business, or if you want to raise equity or debt capital, what does this mean to you??
If we go back and look at a variety of financial calamities, there is one common denominator. Whether it is the Russian debt crisis, the Asian currency crisis, the 1987 market meltdown, or the more recent 2008 Lehman Brothers, Enron financial meltdown, or last month’s Greece default and China today, investors step back to see what will happen next. In stock investing, one learns not to try to catch a falling knife – it can be painful.
Banks always react after the crisis is out of control.