Down is just as good as up.

From Ludwig von Mises’ Human Action:

“[The average businessman] associates the notions of rising prices and profits on the one hand and of falling prices and losses on the other. The fact that there are bear operations too and that great fortunes have been made by bears does not shake his dogmatism.

[...]

Entrepreneurs and investors do not bother about secular trends. What guides their actions is their opinion about the movement of prices in the comming weeks, months, or at most years. They do not heed the general movement of prices. What matters for them is the existence of discrepancies between the prices of complementary factors of production and the anticipated prices of the products.”

I found this passage compelling.

For entrepreneurs, the prospect of broad-based ‘recovery’ in the economy — usually a euphemism for a general increase in stock prices — is irrelevant. A boom in stock prices does nothing to spur entrepreneurs unless those same individuals can identify and exploit price discrepancies that have been generally obscured.

Entrepreneurs and investors who wait for ‘recoveries’ before acting are missing out on how the process works. If prices are declining in one area of business, it’s an invitation for entrepreneurial activity to reorganize the order of production there.

AirBnB did just that in one of the most severe real estate bear markets in history. Conventional wisdom would say to avoid starting a company in a crashing sector. It’s when a sector is crashing or booming that you want to re-examine it as an entrepreneur.

The general public — and the financial press — sees gains and losses in prices as positive numbers and negative numbers respectively, and emotionalizes each. The TV commentator will become giddy and overjoyed when the number is positive. They turn frantic when the number goes negative.

A market is ripe for entrepreneurial action when the price changes are large, regardless if that change is a negative number.