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> There is a LOT of money still sitting on the sidelines waiting to be deployed. And it WILL be deployed, that’s what investors do. Reminds me of the saying: "Venture Capital starts with too many good ideas chasing too little money, and ends with too much money chasing too few good ideas."
Earlier quoted context omitted.
In the previous crash, even viable companies that were growing and made sense were brought close to crisis. Currently Nikola motors is worth a few billion. In a crash they'd be dead.
That just means the market is illogical though, does not mean a crash must mean all of sudden all investors are logical? As quoted by the famous Keynes, “The market can remain irrational longer than you can remain solvent.” It’s like meme stocks like AMC/APE and GME. Does any of it make sense to me? Nope. Are people making and losing a ton of money? Sure. Is it a good indication of US economy health or dare I say, US…
I wouldn't call it a crash if there is positive irrationality.
> There is a LOT of money still sitting on the sidelines waiting to be deployed. And it WILL be deployed, that’s what investors do. Reminds me of the saying: "Venture Capital starts with too many good ideas chasing too little money, and ends with too much money chasing too few good ideas."
Broad markets will crash and LPs will ask for capital back. The overhang will drop without requiring investment.
Not all LP commitments have the same durability.
It’s like leasing a building to a first time restaurant owner or a big public company doing restaurants and getting identical rent. One is more durable (and valuable) than the other. But it gets left out of cash flow.
Same with counts of dry powder.
"Post" crash? If you think what we've seen is the crash you have no idea what's coming.
> There is a LOT of money still sitting on the sidelines waiting to be deployed. And it WILL be deployed, that’s what investors do. Reminds me of the saying: "Venture Capital starts with too many good ideas chasing too little money, and ends with too much money chasing too few good ideas."
Broad markets will crash and LPs will ask for capital back. The overhang will drop without requiring investment.
if a legitimate large corporation is having trouble raising money, its a huge red flag.
Earlier quoted context omitted.
Going in the other direction, we’re 11% above the pre-COVID high for the S&P. And that’s with $6+ trillion dollars having been pumped into the economy. There’s plenty of crash and plenty of inflation left in the pipes.
Would you consider it a crash if S&P was just flat for a decade?
The recent (since the 80s) history of financial ups and downs has been - savings and loan - junk bond - dot com / financial engineering (Enron) - mortgage backed securities - VC Basically, money chases outsized returns, some new thing emerges to satisfy the demand, it becomes effectively a ponzi / house of cards, it falls apart, we shift to the next thing. It's impossible to predict when and what will happen of cours…
The recent (since the 80s) history of financial ups and downs has been - savings and loan - junk bond - dot com / financial engineering (Enron) - mortgage backed securities - VC Basically, money chases outsized returns, some new thing emerges to satisfy the demand, it becomes effectively a ponzi / house of cards, it falls apart, we shift to the next thing. It's impossible to predict when and what will happen of cours…
So many people working in VC went straight into it after Stanford without ever starting a company, like it’s investment banking or something. Maybe the VC industry will shrink along with the startups, or at least the unhelpful partners.
Earlier quoted context omitted.
Genuinely curious what you think crash means. 2021 definitely inflated our stock market way too much but we're definitely within reasonable corrected zone IMO. What should we expect as a crash? Even with the Great recession, we're looking at a 27% drawdown so we're about halfway there?
In the previous crash, even viable companies that were growing and made sense were brought close to crisis. Currently Nikola motors is worth a few billion. In a crash they'd be dead.