A VC in Vacationland

Image via Wikipedia

Mr. Market sure has done a job on most of our portfolio company valuations in recent months, not to mention individual portfolios. I began thinking that perhaps his wife, Mrs. Market, might take a kinder, more gentler approach to managing global finances.  I did find a photo of her, dressed in her early 1900's finery, but no indication that she was interested in taking over the management role from her dear husband, who is perhaps best personified by Mr. Henry Potter from It's a Wonderful Life.

But this did not deter me from thinking about how Mrs. Market would react to the current financial crisis.  Would she be motherly towards her panicked children, telling them to wait out the storm in safe investments?  Would she be aggressive and tell them that there has never been a better time in their lives to invest in solid companies?  Would she practice the fear and loathing that bankers and other lenders, like Mr. Potter, have wrought on the poor folk in Bedford Falls?

My sense is that she would do none of these.  Unlike Mr. Market, who believes that all worldly solutions to financial dealings should be solved in a free market setting, Mrs. Market would be much more pragmatic.  After all, she is the one who has to feed the children when the husband runs away or dies in a tragic accident.  She knows all about dealing with crises.

She would let weak companies fail, then work to rebuild economies around those companies who will be long-term survivors.  People will lose jobs and eventually will get new ones.  She would not let anyone starve to death, although everyone will not get what they think they deserve. She would sacrifice her own well being to make her kids more successful. 

We are a society that has run up big debts and will run up more in the next few years.  That will create burdens for our children unless we get down to business now and revamp the world economies. We should start the painful process now and stay away from corporate/state/local government bailouts that will only prolong the misery.

Let the markets work, but with compassion.  We never want the miseries of the Great Depression again.  People will need to be helped through foreclosures, finding new jobs and financial restructuring.  But we should use our national wealth to invest in the new, new world, not the bankrupt industries that lead us to the precipice. That, in my mind, is what Mrs. Market would do.