As the CEO of a tech start-up, it is part of my job to think about how the current macro climate affects our business going forward. One of the things that worries me is that the current generation of managers and advisers have never really managed anything in anything resembling a real recession. I think that is a very dangerous situation.

What makes me think this way is the chart below. It shows the year-on-year development of the Dow Jones Industrial Average from the first trading day of each year to the first trading day of the subsequent year.

What the chart shows is that the 1980s and 1990s and 2000s have been great times to be in business. You may notice that the ‘stock market crash’ of the late 1980s doesn’t even register. What people think of as ‘bad’ has only really been somewhat uncomfortable. I think that even if you have been in business for 30 years, you have actually not seen really bad times. The last time it was bad was in the 1960s/1970s. Everything since then has been smooth sailing, including the burst of the dot.com bubble.

What confirms my thinking are statements like the one by the CEO of Deutsche Post (the world’s third largest logistics company): “I am expecting a sharp recession that will be over very quickly. […] ”

Really? Amazing. Could be famous last words. How does he know?

Looking at the chart, I am preparing for anything. In 1930 the stock market fell some 35%. It fell by an additional 55% the next year. And an additional 20% the year thereafter. There were 15 (that is fifteen) years of literally no value growth in the 1960s/1970s. Fifteen years. That is a very long time.

Hope for the best, be prepared for the worst. I hope it is going to become better soon. But I am preparing myself for the worst. And the worst could easily be ten very tough years being ahead of us.

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