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Stock swoon: Buy, sell or hold on for a moment?

Over the weekend, someone asked my why the stock markets were going down. I told him it was because they had previously gone up. Seemed like as legitimate an explanation as any (and saved me from spending an hour discussing Chinese economic tumult, why falling oil prices are causing counterintuitive mayhem and how Janet Yellen should write a cautionary tale about the dangers of procrastination).

So I’m not here to tell you things are going to continue to spiral, or that everything is going to be okay. I have no actual idea (nor does anyone else, including those on TV saying to buy or sell).

That said, I am getting the sense from talking to folks in the private markets that a lot of stuff is being put on hold until we get more clarity. Big funding rounds, leveraged buyouts and IPOs. It helps that there is a relative paucity of such stuff anyway in the dog days of August, which means Labor Day should be the major marker.


If things have settled down, then all systems reignite. If not, we could see a rash of stranded unicorns (seeya VC tourists!), broken buyout deals (hello Delaware Chancery Court!) and an IPO market in which only the most fundamentally sound or insignificant dare play (Uber, but for night sweats). Oh, and there also is the prospect of the dreaded ‘denominator effect‘ returning to cause problems for VC/PE firms that had planned to raise new funds in early 2016.

But I’m not ready to go all RIP Good Times quite yet. Maybe soon, but not yet. If for no other reason than it’s unclear how the stock swoon will harm the actual economy, any more than the recent bull market helped it. Lack of apparent correlation goes both ways, you know…

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