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I assume instacart has a liquidity event (IPO) lined up for the near future (next 12 months), and a few late stage and previous investors are laying down a cash

I assume instacart has a liquidity event (IPO) lined up for the near future (next 12 months), and a few late stage and previous investors are laying down a cash runway to get the company there. Notably this round ($200m) was less than their last round 1 year ago ($400m) so it seems growth has slowed and its time for an exit. So its not a bet, its a holdover cash infusion until the IPO, and is not exactly risky given how mature and well-capitalized the company is at this point. The only real bet is that they'll be able to IPO before a market downturn, which seems pretty safe, I have yet to see anyone put forth and truly plausible triggers for another large global recession - there are no debt and enforcement chains I can see that would drag the system under again. But I'm not a financial expert, just an armchair economist, and if I knew what would trigger the next recession I wouldn't be posting here ;)

jjxw 9y ago
From one armchair economist to another I suspect the Federal Reserve will have something to do with what I wouldn't call a "recession" per se, but a slowing of growth through interest rate hikes.
- roymurdock 9y ago
  Fed doesn't have much room to play with interest rates currently, and won't until we see a meaningful pickup in productivity, or else they risk further depressing investment into productive assets and rerouting it into speculative assets (high interest rate = high cost of borrowing/lending = high friction = slows economy down). We would observe a productivity increase through wage growth, as would be expected in a high employment environment (high demand for labor, low supply sets price of labor [wages] high) but I don't see anything from my viewpoint within the embedded and IoT industry that will meaningfully increase productivity in the near future. So more of the same we are experiencing now Unless you see some new tech that will improve productivity, in which case please do share!
  - jjxw 9y ago
    Ah - that's an interesting perspective I had not considered. I was basing my prediction on the stronger than expected job gains, GDP growth forecasts, and how the Fed is cutting back on quantitative easing. Keeping an eye on the US inflation report coming out this Wednesday should provide more guidance on what the Fed may do - if it's higher than expected I think the Fed will probably raise rates by another .25%.
    - roymurdock 9y ago
      Yep, I think the more interesting question is: if labor market is so strong (low unemployment) then why aren't wages increasing meaningfully? Here's one of my favorite practicing economists giving a bit more insight into the Fed and its interest rate strategy: https://www.newsmax.com/finance/narayanakocherlakota/fed-drive-right-brakes/2018/01/24/id/839063/ https://www.newsmax.com/finance/narayanakocherlakota/fed-dri...
gruez 9y ago
>I have yet to see anyone put forth and truly plausible triggers for another large global recession - there are no debt and enforcement chains I can see that would drag the system under again that's not an indication of anything. has there been anyone who were able to predict the last few recessions with reasonable accuracy?
- roymurdock 9y ago
  ok, and yes there were a few traders and economists who did ("the big short" follows 3 of these traders' stories), but in order to trade you need to have a thesis for what and when to buy. there are tons of gloom and doom traders and economists (usually trying to sell "safe" or alternative assets) but i have yet to read any clear, compelling cases laying out what and when to buy when the first domino falls that will set off the next recession. i'd be interested to read anything you've found noteworthy
  - lazerpants 9y ago
    The typical advice for the beginning of a market downturn is to buy bonds, which usually act as a safe haven from those fleeing stocks (perhaps untrue currently though). Alternatively, some propose purchasing blue chip dividend yielding stocks, as money moves from risky stocks to tried and true ones. During a recession/large market correction, you're looking to hold all cash and just buy stocks cheap after they drop all the way to their lowest point (think Ford or AIG in 2008). The problem with these strategies is that market events usually occur over sufficiently long time frames to obscure their size and direction. Looking back at 2007/2008, Lehman was the obvious "moment" but the market and economy didn't nose-dive instantly to their nadir on the collapse of Lehman Bros. It feels like there was a "moment", but it was only obvious in hindsight.
    - roymurdock 9y ago
      I'm not talking about safe assets, I'm talking about what to buy now in advance of whatever crash is coming :) For example leading up to the 2007 crash the pros that saw weakness in the mortgage market created and bought "credit default swaps" allowing them to bet against mortgage-based securities
lazerpants 9y ago
It's really important to point out here that market downturn =/= recession. They often occur simultaneously but some market downturns are unrelated to recessions.

jjxw 9y ago

From one armchair economist to another I suspect the Federal Reserve will have something to do with what I wouldn't call a "recession" per se, but a slowing of growth through interest rate hikes.

roymurdock 9y ago
Fed doesn't have much room to play with interest rates currently, and won't until we see a meaningful pickup in productivity, or else they risk further depressing investment into productive assets and rerouting it into speculative assets (high interest rate = high cost of borrowing/lending = high friction = slows economy down). We would observe a productivity increase through wage growth, as would be expected in a high employment environment (high demand for labor, low supply sets price of labor [wages] high) but I don't see anything from my viewpoint within the embedded and IoT industry that will meaningfully increase productivity in the near future. So more of the same we are experiencing now Unless you see some new tech that will improve productivity, in which case please do share!
- jjxw 9y ago
  Ah - that's an interesting perspective I had not considered. I was basing my prediction on the stronger than expected job gains, GDP growth forecasts, and how the Fed is cutting back on quantitative easing. Keeping an eye on the US inflation report coming out this Wednesday should provide more guidance on what the Fed may do - if it's higher than expected I think the Fed will probably raise rates by another .25%.
  - roymurdock 9y ago
    Yep, I think the more interesting question is: if labor market is so strong (low unemployment) then why aren't wages increasing meaningfully? Here's one of my favorite practicing economists giving a bit more insight into the Fed and its interest rate strategy: https://www.newsmax.com/finance/narayanakocherlakota/fed-drive-right-brakes/2018/01/24/id/839063/ https://www.newsmax.com/finance/narayanakocherlakota/fed-dri...

gruez 9y ago

>I have yet to see anyone put forth and truly plausible triggers for another large global recession - there are no debt and enforcement chains I can see that would drag the system under again that's not an indication of anything. has there been anyone who were able to predict the last few recessions with reasonable accuracy?

roymurdock 9y ago
ok, and yes there were a few traders and economists who did ("the big short" follows 3 of these traders' stories), but in order to trade you need to have a thesis for what and when to buy. there are tons of gloom and doom traders and economists (usually trying to sell "safe" or alternative assets) but i have yet to read any clear, compelling cases laying out what and when to buy when the first domino falls that will set off the next recession. i'd be interested to read anything you've found noteworthy
- lazerpants 9y ago
  The typical advice for the beginning of a market downturn is to buy bonds, which usually act as a safe haven from those fleeing stocks (perhaps untrue currently though). Alternatively, some propose purchasing blue chip dividend yielding stocks, as money moves from risky stocks to tried and true ones. During a recession/large market correction, you're looking to hold all cash and just buy stocks cheap after they drop all the way to their lowest point (think Ford or AIG in 2008). The problem with these strategies is that market events usually occur over sufficiently long time frames to obscure their size and direction. Looking back at 2007/2008, Lehman was the obvious "moment" but the market and economy didn't nose-dive instantly to their nadir on the collapse of Lehman Bros. It feels like there was a "moment", but it was only obvious in hindsight.
  - roymurdock 9y ago
    I'm not talking about safe assets, I'm talking about what to buy now in advance of whatever crash is coming :) For example leading up to the 2007 crash the pros that saw weakness in the mortgage market created and bought "credit default swaps" allowing them to bet against mortgage-based securities

lazerpants 9y ago

It's really important to point out here that market downturn =/= recession. They often occur simultaneously but some market downturns are unrelated to recessions.