Topley’s Top Ten – July 22nd, 2019

Author

Matt Topley
July 22, 2019

1. Private equity firms poised to sign record number of deals

The Bain & Company data showed multiplesfor companies being bought in the US and Europe are close to 11 times earningsbefore interest, tax, depreciation and amortisation.

2.$4 Trillion Was Committed to Private Equity in Last Decade.

$1 Trillion in Dry Powder

Number of Deals Set Record But Amount of Money Raised in Venture Still Below 1999 Internet Bubble.

3.Returns Needed by VC Funds.

A 10-year fund needs to return 3x the fund size

We agreed VCs need to earn 12 percentreturn a year, right? Most funds, while only actively investing 3-5 years, arebound to 10 years. Many newer studies are showing that 12-14 year funds aremore accurate for today, but let’s stick with 10 just to give the VCs afighting chance. That annual 12 percent rapidly grows, showing the power ofcompounded interest. Let’s see the math:

Don’t forget Pareto: 80 percent of returns come from 20 percent of startups

Facts oflife are that startups are hard. Breaking even is hard. Profits are hard.Keeping profits growing year over year (YoY) is even harder. Out of 10companies, only two will really explode and IPO/M&A, giving our dear VCssome of their money back. The rest, as we’ll see, will fizzle out and die — orhave a small liquidation event, which is pretty much the same.

4.Bond Bullish Sentiment Near Extremes.

NED DAVIS

5.History of Low U.S. Treasury Rates.

American Funds.

6.Buffet Indicator-Using Whilshire 5000 to GDP Back to 1999 Highs.

Market Cap to GDP: An Updated Look at theBuffett Valuation Indicator

by Jill Mislinski, 7/2/19

7.Technology Stocks Make New Highs in Relative Strength Versus Other Sectors.

Bespoke Investment Group

 While the sector has been a market leader for some time, it has finally erased all of its underperformance from the month of May and is the only sector where relative strength is at a new high.  One contributor to the sector’s strength recently is semiconductors. From its highs in April to the May lows, the Philadelphia Semiconductor Index (SOX) nearly reached bear market territory on an intraday basis falling 19.8%.  Since then, the SOX has rallied 18.9%, and while it is still shy of new highs for the year, it did close on Thursday at its highest level since 5/6.  

8.The Best Performing Stock of Decade Beating All FANGs

Dominos sees firsthiccups in earnings…sideways for one year without making new highs.

9.As Rates Around the World Drop Toward Zero…Money Moves to Precious Metals.

Everyone talkingGold…Silver Holds Bottom Turns Up.

10.How To Speak With Purpose

Making your words morevalue-adding.

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not gonna lie; I wasonce a part of the Twitter echo chamber. I used to think I was so good atdiscourse since my angry Tweets and super long threads on the pettiest thingsgained clout. I really thought I was making a difference by standing up to thethings I thought should be called out — turns out I was just contributing to abig whirlwind of Notice Me, I’m Angry.

I’m still on Twitter now,but I’ve learned since then how to keep what I say value-adding and not justone more angry sentiment shared by one more angry centennial with WiFi. I’vealso realised that these things, although effective when used in an onlinecontext, have also influenced the things I say in real life — and believe mewhen I say that it’s gotten so much easier to get my point across when I’vetaken the following into consideration:

Does itstill need to be said?

The first thing I take intoconsideration is if I’m literally going to be addingany value tothe conversation by saying something. If someone has already said it in a waythat I think has covered everything I needed to say as well, that’s enough forme. It’s always good to add ideas or a fresh perspective to something that’s onthe table, but if you’ll just be repeating what someone else has already saidwith nothing to really build upon it just for the sake of having something tosay, then what’s the point?

Have Ilooked at all its angles?

Especially if it’s somethingthat’s brought about strong emotion, I stop myself from immediately reacting tothings before I’ve thought it through at least a little bit. Is there aperspective I’m missing?

It can be difficult todiscern this on your own, so I’ve also learned that phrasing things in the formof a question works as well. Asking to be educated about other takes on thematter before responding to it declaratively allows for me to learn more aboutan issue first in an instance where I could have acted like the authority onsomething I didn’t really have a lot of prior knowledge about just because ofsomething I’d read or heard.

Does itjust spread anger?

Being angry has its merits;revolutions are built on anger and the desire to make things better. It’sthe make things better part that I used to forget.

I believe there’s such athing as constructive anger, which is a means to an end; it’s fuel to keep anidea going until people can improve on that which they were angry about and makeit actually mean something. That anger is good. It’s somethingthat has the potential to be channeled into something productive.

On the other hand, there’sdestructive anger, which doesn’t really do much other than what it’s named for.It can be petty, and it’s rarely directed into anything meaningful. This is theanger we should stay away from.

Before responding toanything with anger, I’ve learned to make sure that it’s constructive ratherthan destructive. If I’m just adding my voice into a whirlwind that’s gonnabring nothing but negativity into the world, I’d rather not, especially whenthere’s an alternative to the whirlwind that could actually make somethinghappen in the end.

Am Istepping on someone’s humanity?

Unfortunately, this questionis here because I’ve been on the wrong side of its answer. I thought I wastrying to be funny while keeping things relevant; even if my general argumenthad a point, it was overshadowed by how poorly I phrased the initial statementbecause I’d turned it into something that made light of someone’s misfortune.Not only was it a horrible thing to say to somebody, it was also a waste ofattention when I could have gotten my point across in a more positive way.

This is generally an easierquestion to answer, but it’s one of the most important ones. No matter howgreat your argument is, if it’s stepping on someone’s humanity, it needs to getreframed.

Does itcontribute to a goal?

What exactly am I sayingthis for?

This is the most importantone. Someone once told me not to waste time on things that don’t contributetowards your personal goals. She had a point; I was involving myself with toomany things that took my attention which had nothing at all to do with what Iwanted to do with my life. Know what it is you want to do and stick to it;there’s no better way to ensure that you’re consistently working towards yourgoals and not straying into unnecessary distractions.

Applying this to the thingsI say, whenever I speak out on something, I try to make sure it’s in line withthe things I believe in and the things I want to be doing. If it doesn’tcontribute directly to a goal, I try to at least make sure it contributes tosomething else that’s equally meaningful; otherwise, it’s just a waste ofenergy.

So, just to recap:

  • Does it still need to be said?

  • Have you looked at all its angles?

  • Does it just spread anger?

  • Are you stepping on someone’s humanity?

  • Does it contribute to a goal?

Asking these questions won’tmagically make everything you say purposeful, but being mindful of these thingsbefore speaking out is definitely a good start.