9 ms·

Risk has already come off - I am seeing it in private equity. If you run a startup and burn cash, have your plan B ready to go when the shit hits the fan. http

• nickles 8y ago
  > Risk has already come off Are you able to elaborate on the derisking you've been seeing?
  • ttul 8y ago
    Angels pulling out last minute because they are worried about their stock portfolio. Investors withdrawing from a levered strategy because of the same concern.
    • deleted 8y ago
      [deleted]
  • anonu 8y ago
    Many companies are laying off right now...
    • nickles 8y ago
      Respectfully, that's not the sort of color I was hoping for. Instead, consider evidence of derisking as exhibited by recent moves in HY OAS [0]. [0] https://fred.stlouisfed.org/series/BAMLH0A0HYM2 https://fred.stlouisfed.org/series/BAMLH0A0HYM2
      • azernik 8y ago
        Perhaps, but when it's industry-wide it's often a good leading indicator. My previous employer's only layoffs ever were in 2008, when one of their investors (I believe A16Z?) sat down the founders of their portfolio companies and told them to cut down, because the crunch was coming. These are companies whose management is in very close personal contact with the capital markets, and so often make decisions very quickly in response to what's going on there.
        • nickles 8y ago
          > Perhaps, but when it's industry-wide it's often a good leading indicator. As far as I'm aware, employment data is considered a lagging indicator [0], as labor tends to be reasonably sticky. > These are companies whose management is in very close personal contact with the capital markets, and so often make decisions very quickly in response to what's going on there. I was fishing for other data, in part, because current data does not support the assertion that layoffs have accelerated [1][2]. In fact, initial claims data appears to be at -- or close to -- historical lows. [0] https://www.thebalance.com/lagging-economic-indicators-list-index-and-top-3-3305860 https://www.thebalance.com/lagging-economic-indicators-list-... [1] https://fred.stlouisfed.org/series/ICSA https://fred.stlouisfed.org/series/ICSA [2] https://fred.stlouisfed.org/series/IC4WSA https://fred.stlouisfed.org/series/IC4WSA
    • adrianN 8y ago
      Many companies are hiring right now. Some companies are hiring and laying off simultaneously.
  • tanilama 8y ago
    Layoff, cost cutting.
    • deleted 8y ago
      [deleted]
  • baybal2 8y ago
    > Are you able to elaborate on the derisking you've been seeing? The giant amount of credit that was raised for LBOs during last 5 years of stocks rally. A lot of those LBOs went sour.
    • stevehawk 8y ago
      LBO?
      • lclarkmichalek 8y ago
        Leveraged Buy Out. You use the value of the company you are acquiring to guarantee junk bonds that you sell to raise the money to buy the company. Barbarians at the Gate is a popular book that goes into the details while telling the story of a large LBO.
  • jhayward 8y ago
    One indicator is the number of large venture IPOs. I see Dell going public again, for instance, as an indicator of Michael Dell not wanting to carry the private concentration of assets as a risk any further.
• dehrmann 8y ago
  I remember when this was originally posted 10 years ago. I've got mixed feelings about this. It's not 2008, and there's no reason to expect another 75-year economic event again. On the other hand, tech and VC investment has more than tripped since 2008.
  • jodrellblank 8y ago
    What is the "75-year economic event" timeframe based on? We now have "1000-year floods" five times in a year [1], is there good reason to think the economic predictions are more accurate than the climate ones? [1] https://www.edf.org/blog/2016/09/01/we-just-had-five-1000-year-floods-less-year-whats-going https://www.edf.org/blog/2016/09/01/we-just-had-five-1000-ye...
    • whatshisface 8y ago
      If there are at least 1000/5=200 floodplanes in the country it's not that surprising; and there are a lot more than 200 floodable areas.
      • cperciva 8y ago
        I think you mean 5000 floodplains.
        • whatshisface 8y ago
          You're right, that was a silly mistake.
    • shakethemonkey 8y ago
      Houston had 500-year floods consecutively in 2015, 2016, and 2017. Oh and one in 2001. Must be a terrifically unlucky place.
      • SeanBoocock 8y ago
        That or the context in which such events were considered 500-year events has radically shifted in the last 100 and especially the last 50 years.