With the impact of COVID-19, the economy has been witnessing a drastic fall. The stock market around the globe has been facing a rigid fall since February 2020. According to sources, there has been a serious drop in the stock market in the US — the Dow Jones US Total Stock Market Index fell more than 1,000 points, it is the largest slide in two years.
Stephen Moore, an informal economic adviser to the Trump team said, “The view in the White House is that this is one of those classic black swan events, and all we can do is control the health issues in the U.S.” US President Donald Trump said in one of his tweets, “We cannot let the cure be worse than the problem itself. At the end of the 15-day period, we will make a decision as to which way we want to go.”
Venture Capitalist Mark Suster calls this situation as a Black Swan Event, a term popularised by Nassim Nicholas Taleb’s book “The Black Swan: The Impact of the Highly Improbable” and explains about the uncertainty of what will happen next, which will eventually result to be very difficult to survive.
He also explains the cons of social distancing that has been widely accepted as the mitigation technique. This technique dramatically hits certain sectors such as domestic ait travel, hotels and chain restaurants and thus impacting the most vulnerable people in the society.
According to him, if the public market valuations continue to decline, it will undoubtedly come to private markets. Also, resetting to private valuations will take a longer period of time and those who don’t realise the change will eventually have to struggle to get funded.
About the tech space, Mark explains that there is an optimistic side that should be maintained by the tech organisations. The internet connection is a thousand times faster than it was a few years ago. With the banks and credit cards of the users connected to the tech platforms and almost everything online, the society remains connected.