Harsh economic conditions instruct our sense of value
After reading Mark Suster’s guest post on TechCrunch (here’s the same post on his blog), I was reminded about the necessity for economic fluctuations. If economic activity only went one way (grew or contracted smoothly) there would be no secondary effects to observe. In other words, we would never know if values (or valuations for companies) were relatively or absolutely reasonable. The variation of economic conditions plays a critical role in the estimator that continual informs our sense of value.