Week 47
2 min read

Week 47

Hi Reader,

I've been reading Howard Mark's "Mastering the Market Cycle". In the book, he covers a number of different cycles, the psychological cycle, debt cycle, real estate cycle among others. It fascinates me that crises can have different triggers but ultimately end up depressing equity values. I've been thinking about this in the context of reducing personal exposure, but it's hard to find conclusive signals.

Ray Dalio & JP Morgan says gold is key, but gold just hit all time highs. Many argue for reducing equity exposure but Warren Buffet claims that equities go up most years and that crises cannot be timed. Framing matters a lot when thinking through these decisions.

One thing I do want to convey is that all signals show we're coming toward the end of the bull cycle, and this week a few more posts hopefully indicate that.

From a start-up perspective, I'm most interested in the VC seed bubble and its implications. How does it relate to overall economic conditions? Probably a lot - VC is one of the few asset classes that still promise high yields, but eventually the narrative does come to an end. VC returns do have a lag time so now that these funds will have closed, the money is locked in and it could take 3-10 years for the investors to realize it was wasted. It's likely however an eventual decline in public tech company valuations could accelerate this sentiment and at least we should see further in flows dry up soon. For Founders the obvious implication is to raise now; a down round is possible but I still don't understand why people see that as a bad thing.

🚀 Start-ups

Jason Lemkin explains that all tenacious Founders with 10 customers ultimately win.

Bay Area seed valuations are in a bubble reaching $9.1 M pre-money valuations at seed. This is a 10% per year increase in seed valuations which cannot continue to grow faster than the public equity markets (where these companies ultimately end up).

🌍 Macro

JPMorgan thinks "the dollar's exorbitant privilege is coming to an end".

Patrick Collison and Tyler Cowen make a case for progress studies and get attacked by a mob of Twitter historians. They are ultimately right, we should have a way of speaking about progress.

Tobias Huber and Byrne Hobart apply Rene Girard to understand bubbles in this new paper.

UBS deciding to pass negative interest rates on their wealthy clients.

💸 Crypto

The small handbook to Asia crypto wonderfully summarizes crypto activity in Asia at a city-by-city level.

😎 Misc

Joe Rogan will host John Carmack. If you aren't excited about John Carmack yet, I'd recommend reading Masters of Doom. Every developer wishes they were part of that team.