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The biggest one is that people all across America are invested in tech companies. Pension funds are big investors in PE and VC funds, as well as investors in pu
by kolbe 11y ago
The biggest one is that people all across America are invested in tech companies. Pension funds are big investors in PE and VC funds, as well as investors in publicly listed equities. A tech bust would put further strain on already strained public pension systems across the US, and could even result in something like a federal government bailout if those systems cannot bear the additional burden (i.e. taxpayers everywhere foot the bill).
- whatok 11y agoI would be very surprised if there were any pension funds out there with such heavy VC allocations to the point where a downturn would encourage a federal bailout. Do you know of any?
- kolbe 11y agoIt's just one more straw. I don't think there's a single class of investment in any pension fund that would alone make a bailout necessary. But I wouldn't be at all surprised to hear that a tech sector bust would cost several funds upwards of 10%. Add a few more failures of that kind to the mix, and we'd be talking bailout.
- whatok 11y agoHow are you coming up with 10%? Do you know what the typical allocation to VC for a pension fund is?
- kolbe 11y agoVC and PE? 5%. But add to that exposure to the publicly listed tech sector, for aggressive funds, that could be as high as 20%. Then there are secondary effects like a downturn in Bay area real estate.
- whatok 11y agoPE is going to have completely different dynamics as far as industry allocations. I would love to see an example of a pension fund with a 20% allocation to tech. And if you're talking about a federal bailout, this is likely going to be a public pension fund which makes it even more unlikely.