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> However, I'm not at all concerned about the stock market. That has never influenced my decision to fund a company. It probably will as things start to slow d

> However, I'm not at all concerned about the stock market. That has never influenced my decision to fund a company. It probably will as things start to slow down. During the growth phase of the business cycle, many companies do well. Even some with poor fundamentals that shouldn't. This is the danger of stimulus - it promotes an inefficient and wasteful allocation of resources. But it makes investing easier as a larger pool of companies are succeeding and finding exits for their founders and investors through IPOs and acquisitions, which are both very closely correlated with the health of the stock market. During the contraction phase, the companies with poor fundamentals are exposed. Ok, no loss there, they were struggling and nobody really believed in their potential anyways. But contractions can also bring down good, solid companies who were just caught unaware and were not holding enough liquid assets to pay their employees and the interest on their debts. Some non-negligible percentage will not make it through a rocky period while liquidity dries up and relatively cheap funding/investing slows down. I think it's smart to not read too much into the stock market as it can be distracting and noisy, but I think its trajectory and what it indicates about the phase and timing of the next business peak/trough cycle is extremely important and should not be discounted.

dsacco 11y ago
You have a very good point, in that the stock market's current phase ultimately affects the health of all its constituent companies (in both a symbiotic and parasitic relationship). But like you said, I don't consider it helpful to pay attention on a day to day basis, and I find it to be a more useful indicator for macrotrends than microtrends. In other words, my understanding of the stock market will influence my opinions about the angel investing and startup market en masse, but it would not be anything more than one factor in my opinion about a single company I could invest in. While it's true that companies with strong fundamentals do fail in a downturn, companies with strong fundamentals can fail for any number of reasons. Just as I'm not all that concerned with my Vanguard funds going down for a while because they'll be back up in 10 years, I'm not too worried about a single company with strong fundamentals getting caught with its shorts down when the tide goes out. If it happens, it happens; in the absence of other poignant data, however, I find it much more important to focus on the company itself and pay attention to macrotrends more infrequently. Besides, a market downturn is an excellent time to hedge long bets with shorts :)
- haxeny1 11y ago
  > hedge long bets with shorts I am curious, without sharing details obviously, have you actually been able to successfully pull it off or do you expect to see some hits due to changes in direction?

dsacco 11y ago

You have a very good point, in that the stock market's current phase ultimately affects the health of all its constituent companies (in both a symbiotic and parasitic relationship). But like you said, I don't consider it helpful to pay attention on a day to day basis, and I find it to be a more useful indicator for macrotrends than microtrends. In other words, my understanding of the stock market will influence my opinions about the angel investing and startup market en masse, but it would not be anything more than one factor in my opinion about a single company I could invest in. While it's true that companies with strong fundamentals do fail in a downturn, companies with strong fundamentals can fail for any number of reasons. Just as I'm not all that concerned with my Vanguard funds going down for a while because they'll be back up in 10 years, I'm not too worried about a single company with strong fundamentals getting caught with its shorts down when the tide goes out. If it happens, it happens; in the absence of other poignant data, however, I find it much more important to focus on the company itself and pay attention to macrotrends more infrequently. Besides, a market downturn is an excellent time to hedge long bets with shorts :)

haxeny1 11y ago
> hedge long bets with shorts I am curious, without sharing details obviously, have you actually been able to successfully pull it off or do you expect to see some hits due to changes in direction?