Recently, natural disasters and economic crisis seem to be the subject of any small talk since the crisis affects not only economy, but our mind. A terrible feeling of insecurity is easily comparable to an earthquake slipping the ground under your feet.
Just don’t panic
Human experience shows that the pessimistic expectations of customers regarding the future income increase the share of savings in asset management. Psychologically such phenomenon is quite easy to understand, though hardly to justify.
Kitchin cycles discovered in 1920s can provide a simple pattern traditionally associated with delays in time (time lags) related to the flow of information that affects business decisions. Therefore, an understanding of these cycles’ nature allows potential investors to overcome the phases of recovery, rise, boom, recession and depression more easily.
In fact, not all businessmen consider crisis as a disaster. After all, those who manage to prepare the ground during recession or depression, may count on higher return rate on the recovery phase, while their overly cautious competitors can do their best just to maintain the existing position.
He who hesitates is lost
Even if people tend to spend less, it doesn’t mean their needs are reduced. One should keep in mind that the project creation takes certain amount of time. More serious problem requires more hours (or even days) for its technical solution and further debugging. And indeed, the current recession is likely to be transformed into depression offering enough time for product to be promoted and upgraded.
Speaking about the IT-industry, we need however to underline the obvious point that the development of software and various web services can’t be frozen for months like the sleeping beauty’s kingdom. The unstable behavior of NASDAQ just indicates upcoming profound restructuring of the industry, but not its dramatic decline.
So, there are some reasonable questions: what kind of resources needs urgent investments, can we talk about elasticity of demand for IT-products, and if so, how this elasticity could be measured?
Dead money kills your ideas
In fact, there are no clear measurement criteria, and they can’t even exist. Through the past 10 years an attitude to entertainment has been changed dramatically. Nowadays it is viewed as an ordinary part of people’s daily lives. Thus, while choosing a business, game or social network solution, one should firstly pay attention to its idea and quality, rather than to a dubious pseudo-statistical economic forecast on growth or decline of investment attractiveness within a particular segment.
The only thing one can trust for sure is that the number of those wishing to use free services is expected to be much greater than before the crisis. Such an approach, in turn, could ensure the future recognition of the service leading to its use for a fee since other start-ups have not even started yet.
No one would argue that creating a product only for its creation appears to be initially ineffective. And no one would be enriched by the money saved on non-implementation of promising new ideas. Of course, the storage of cash and investments is just one of possible options for risk diversification. But it’s always worth remembering that the “dead capital” rarely helps in achieving the goals and realization of great insights.
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