Making Sense of Market Momentum

The 30-Thousand-Foot View

If you paid 200x forward earnings in Q4 for a “hot” SaaS startup, I’m sorry for your (near-term) loss. And if you paid 200x forward earnings for a consumer business, I would love to send you a few deals to mark up! Yes, if Boston’s weekend snowfall is any indication, it is officially winter. Last week, stocks fell for the fourth consecutive week, marking the NASDAQ’s worst January since 2008, despite close to record-setting inflows from retail investors. Meanwhile, in other universes, the crypto market has shed more than $1Tn in value. These days, it certainly feels like the Grinch stole more than just Christmas.

The Ground-Level Game

In a land that feels increasingly far, far, away, over 40 million workers (yes, a quarter of our nation’s workforce) filed for unemployment in the early days of the pandemic. With hysteria mounting faster than Kanye’s ego, the Fed was swift to put its full force behind the U.S. economy in the form of a 150bp rate cut and almost $9Tn in balance sheet purchases (roughly 3x the amount deployed during the Financial Crisis). Fast forward almost two years, and the labor market has since recovered with unemployment currently sitting at under 4%, and consumer and business balance sheets fortified (in most instances) to above pre-pandemic levels. Depending how you slice it, the top 50% (more on the other half later…) have never been in better shape. Not only do they have more money saved, but with debt-service ratios at multi-decade highs, there is arguably quite a bit to be excited about (for now).

The Flight Path Forward

So, where to from here? With billions in LP commitments to deploy and a growing collection of companies itching for exits, investors today are eager for clarity on what the next twelve months might hold.

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Meera Clark

Meera Clark

Empowering consumers and prosumers to live their best lives @ Redpoint • Previously, Obvious x Morgan Stanley x Stanford • Reach me @itsmeeraclark on Twitter