On hold for the summer

I’ve spent a lot of time trying to learn as much as I can about the markets and investing over the last 7 years. It was a hobby of mine prior to starting at Secfi and when I joined Secfi, it became part of my job.

One major thing that I didn’t realize was just how much the markets impacted nearly everything in business. For those that work in finance or adjacent, it makes a lot of sense, but you don’t really realize just how connected everything is until you’re living in this world.

When the capital markets dry up, everyone feels it’s impact in one way or another. It’s one gigantic ripple effect. A simple example for those that work in startups.

The public markets going down eventually makes it way to the private markets. Funding becomes harder to come by and companies are not raising capital to grow their businesses. Employees who work at these companies are not going to get much liquidity for their private company shares as the IPO market is dried up and secondaries are also down.

As employees do not have liquidity, they do not spend as much. They are not buying homes. They are not investing money with funds and banks. They do not spend as much buying consumer goods. The ripple effect eventually makes it’s way all the way down the chain.

Capital allocators have effectively taken the summer off while they wait out the storm to get a clearer picture. Down the stream, there are a lot of folks who work in other industries that are also seeing this impact. I spoke with a commercial real estate agent the other day who mentioned that he’s largely taken the summer off as well. I suspect many others are also in the same boat.