
What the current markets are and are not telling us - prostoalex
http://www.sethlevine.com/archives/2016/02/what-the-current-market-are-and-are-not-telling-us.html
======
abcampbell
It's not sentiment that connects public to private markets, it's the literal
capital pipes that allocate money across assets.

When people realize there is a risk they will not get liquidity for their
investment, they try to sell to get cash.

That sale sucks liquidity out of the market, the dollars have to come from
somewhere.

Which is why what's going on in energy markets, or China, or Europe, matter
for startups.

Startups are by their nature consumers of liquidity, as founders sell equity
to get cash to build stuff.

When other assets (public market stocks, energy bonds, CNY, European bank
stocks) are being sold to get cash, this competes for those dollars.

When there is enough selling that asset prices fall, then assets that compete
for the same capital/liquidity also have to reprice lower to attract capital.
Not to mention investors realize they are literally less wealthy than they
thought yesterday.

It's not something as ephemeral as sentiment , it literally works like a
machine. I call it #theCapitalCycle

[https://medium.com/@alexanderbcampbell/a-turn-in-
thecapitalc...](https://medium.com/@alexanderbcampbell/a-turn-in-
thecapitalcycle-4fd0b6193579#.ce9oqj440)

