My friend Niv put together this excellent post ‘When Exponential Progress Becomes Reality‘ it is worth a full read.
For my market brain this is the most important part:
Human perception is linear, technological progress is exponential. Our brains are hardwired to have linear expectations because that has always been the case. Technology today progresses so fast that the past no longer looks like the present, and the present is nowhere near the future ahead. Then seemingly out of nowhere, we find ourselves in a reality quite different than what we would expect.
This is why I poke fun at brokerage analysts and economists.
In many ways, despite the boom that exists in US markets since 2009, we could be much higher. Last November I got back from London and wrote that Nasdaq 10,000 in 2016 was possible. If $UBER, $SNAP, $PINT (Pinterest) and the top 100 private companies that have waited to go public were already public, the Nasdaq would be well past it’s 2000 highs today and that post might have been titled Nasdaq 20,000.
The biotech index is up 200 percent since 2012 when it broke out of its 11 year base. The Nasdaq is working on a 15 year base as we speak.
— Ivaylo Ivanov (@ivanhoff) Feb. 19 at 08:47 AM
The great investors and entrepreneurs have realized that valuations are better in the private market than handing over the valuations to the brokerages and public markets. In 1999 it was the opposite. The bankers were caught up in telling the story of exponential technological progress so the IPO market thrived.
Back to today…
Bill Gurley, one of the hottest Venture Capitalist’s is warning that the pendulum has swung too far into private market valuations.
The money could start flowing into global public markets if just to gain liquidity.
No matter…the year 2015 is the best time ever to be an investor. We have more choices and opportunities than ever with more disconnects because of the exponential nature of technology.
You NEVER have to rely on a bank or an analyst or an economist to buy or sell or make any financial decision.
You have your network. That network is at your fingertips.
The networks I follow have been leaders in private investing and public market investing and both are outside the walls of Wall Street. I have long felt on this blog that those markets are connected.
The tools to connect these public and private markets were not available in 2008. The Venture Capitalists worried about private markets and the Bankers cared about public markets. The data was not connected.
With companies like Datafox (biased investor), Mattermark and CrunchBase as well as crowdfunding proliferation, we all have the tools at our fingertips to connect all the market dots and even profit handsomely.
The opportunity is that few will use these tools and fewer still will put the pieces of the network together to help you read the tea leaves to profit from them.