Too Small To Fail...2023 Edition - High Interest Rates and Deglobalization, Sloppy Money and Bullying Galore

Good morning...

Waaaay back in 2008 I wrote a post titled 'Too Small To Fail' and it went pretty viral. It is worth a read if just for the fact that I was goofing on Jason Calacanis before it was cool :).

It had been a very long year and the world was in the midst of the Great Financial Crisis. Stocks were to bottom in April of the following year and though I had no idea when the panic would end I wanted to be prepared. I was buying stocks and in the midst of writing a lot of personal seed investments in the web 2.0 space. Thank goodness everything worked out great.

In 2008, things were a bit more obvious to me because everyone was panicked and I was so excited about the technology products and platforms I was using every day.

In 2022, I just don't get that feeling. High interest rates and deglobalization have created this wierd cocktail in markets. Bullying and noise are hitting all-time highs on my favorite platforms and as I wrote about a few months ago, even I do not like Apple. In additon, while I do not rely on any Microsoft products, and think the leadership has been pretty genius, they seem to be stifling innovation around the enterprise. The mob on Twitter and the political right have really taken this the last few days led by Elon Musk so the fresh 'Apple is evil' mantra will not die quickly.

In the 2008 post, I pointed out it was the crashed 12 month rolling returns of the S&P that had me optimistic that things could only get better.

In 2022, I do not think the stars align as well for stocks, at least growth stocks.

The chart that has be excited about 'Too Small To Fail' in 2022 is this chart from ARK Investments which I tweeted about a few days back:

I have no idea if the world ever sees as many unicorns as we did from 2015-2021, but I do feel strongly that it is a great time to back the right people at the right price...more so than any time since 2020.

I am putting my time, money where my mouth is as I build my next (new) company in financial services and my partners and I at Social Leverage have backed three new financial service companies in last few months.

Unlike 2008, there is a lot of 'tourist' growth money (sloppy money) so being 'Too Small To Fail' will mean getting profitable early, increasing optionality and being more careful who you choose as your growth partners when growth is the option.

Bring on 2023.