If you are in the #stock #market you know all too well that even the slightest hint of something unexpected or undesired can have major effect on stock prices. They tumble and then rise at dizzying speed of a rollercoaster.
The Situation
Markets are an interesting thing. Economist like to personify them by referring to them as ”the market”. The #market is nervous or the market is bullish. As if the market wasn’t made up of people. People who make decisions. Good or bad. When you sell a house, the price will be set based on the market. But not by the market. You look around and match your asking price with the local market. This is a naturally perceivable process.
In the world of nanosecond driven stock markets however, decisions are not made by sellers or buyers. Those decisions are made by computers. Based on algorithms. Algorithms made by people who run the system. So it is easy to see how the make or break decisions are made by a handful of people. Like having a council of elders in your neighbourhood and only they are allowed to set the market rules and prices. Would be laughable if not scandalous. And yet nobody is raising their eyebrows when it comes to billions of dollars moving from one pocket to other based on a decisions of a self proclaimed elderly. I am not here to pass a judgement on stock exchange though. The above analysis was only necessary to be able to move on to our case study.
So How Does It Work?
Bill runs a personalized stationery business. He has a local store and also runs a #webshop. 60–70% of Bill's sales is coming from online transactions. Bill makes the stationery locally but he has some dependancy on raw materials he is using. Some of it is shipped from national suppliers. He is engaged with his #customers via social media, online ads, local #ads. He doesn’t have much time for news, but every now and then Bill jumps on a news website or TV channel just to make sure he doesn’t miss anything important. So when he learned about the recent stock market turmoil, he was quite shocked. Not so much that it happened, but mostly because he couldn’t tell from his business.
Surprised? You shouldn’t be. Now, you may be a business owner and thinking “I did feel the last turmoil!, It isn't that simple”. I am not disputing that. This is not a blanket case. But it is more prevalent than most of us think. You see, global turmoils are just that global. Those are the nanosecond event driven ‘markets’. Much like a Solar flare, which is a truly global event that does affect us, but in our daily lives we do not have time to worry about them. And yes those can trickle down to individuals, but what Bill does is that he maintains his presence on local level. And while he does sell globally on his webshop, those are still local to local interactions. A local buyer (non-local for Bill though) who needs stationer buys from local Bill. And unless Bill has a major investment in a stock that tumbled he likely won’t feel a thing. Or not much of it in any case.
This Is My Point
My point here is that we are all told how exposed we are to the global market. And while the is a level of undeniable exposure, it is far smaller that we are led to believe. And in the new age of globalized local economies, this exposure is truly minimized.
If Bill’s business was dependent on a specific supplier and that supplier did temporarily shut down then Bill would be more exposed. And in here lies an organic point. Localized economies do not have to depend on globalized players. And this is where we are going now…at last.