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Ok, it seems you know more than me about this so let me try to poke holes in an attempt to learn further. Was there really more capital available in private ma
by akkartik 10y ago
Ok, it seems you know more than me about this so let me try to poke holes in an attempt to learn further.
Was there really more capital available in private markets before 2008? I thought that was just because of post-2008 QE. That timing doesn't seem to work either.
Didn't Microsoft have billions in cash on its balance sheet in the 90's? I thought tech companies always hoarded cash when they were cash cows, and that it was at least partly a consequence of tax regulation, with cash sitting in one jurisdiction (say Ireland in recent years) costing too much to move around.
The fact that the delta in IPOs went up doesn't necessarily seem so indicative. There's a holding capacity for IPOs in an economy. I think your graph shows just how far the holding capacity dropped after SOX.
- justincormack 10y agoQE really doesnt make that much difference, it only affects the bond market directly a bit. VC is getting more money as the returns have been good (finally, historically they werent), while say hedge funds have had bad returns. The amount of money in private markets depends highly on risk preferences.
- mifreewil 10y agoThis is not quite accurate. Sure, directly it only affects the bond market. But the bond market is not isolated from the rest of the markets. After you push loads of money into it, it lowers the returns on relatively low-risk bonds. We now are seeing government bonds with near-zero interest rates (ZIRP). The low returns on bonds pushes capital that otherwise would have gone into those bonds into risker and risker assets, a direct consequence of QE. This has people chasing higher returns in stocks, and yes, VC as well.