Public Markets

Passing The Peak: The Double Whammy Of Inflation And A Looming Downturn

By Prashant Fonseka 

Right now it feels as if we have passed the peak. It actually feels like we have passed many peaks, and seem to be in a perpetual state of passing peaks. The peak that just registered this last month was in financial assets and cryptocurrencies.

We seem to be witnessing a market correction in equities, and the beginning of a bear market in crypto. As someone who never had much in the way of assets to invest in either of these classes before their huge run-ups, this is somewhat welcome.

Maybe I will finally get a chance to ride the next wave. I missed this last one, but in order for me to invest in the next one, the last one had to crash down, and that has taken far longer than I think just about anyone imagined. But it’s also sad to watch. My own psychology with the markets these past days has befuddled me.

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Rather than being upset, I was neutral (to almost happy) to see the value of my own assets drop off a cliff this last month. While others are seeing their losses, I am seeing an opportunity to finally buy in. It is as if maybe, one day, I’ll get to participate in all of this.

Tuesday Capital partner Prashant Fonseka

I suppose I’ve been around for enough cycles now that I know this last peak probably won’t be the all-time peak. I mean, maybe it will, if the world ends, or large-scale war begins. Though if that happens, I’ll have far more to worry about, if I’m lucky enough to still have the ability to worry at all. But it’s still all a bit bad, too.

Decline is never pretty. It’s clear our economy is teetering. I used to wonder what it would be like to experience inflation. There has hardly been any inflation throughout my entire life. I knew it would one day come, but simultaneously felt as if it never would. Now it’s here, and I don’t like it.

Inflation sucks. But while it’s an inconvenience for me, it’s life-altering for others. People, including many of my own friends, are really struggling. Wages are mostly flat but with everything being more expensive, people who were once getting by just fine are now simply not.

Inflation is part of why asset values went up so much. Now, assets are dropping, but inflation persists. We’re walking into a double whammy. We need not have a dramatic economic downturn for this confluence of economic strains to take its toll. For that, I am doing my best to prepare.

There will be more peaks, higher than the last.

Well, until there aren’t, of course.

For markets and empires alike, there will always be ups and downs, and none will last forever. Perhaps a wise rule, then, is to not worry too much about any of it.

Prashant Fonseka is a partner at Tuesday Capital, an early-stage, sector-agnostic venture capital firm that has made hundreds of investments over the last eight years, backing many startups that have gone on to be Silicon Valley standouts and household names, including Airtable, Airbnb, Uber, Cruise, and others. He previously wrote from Crunchbase News on pitch pointers.

Illustration: Li-Anne Dias.

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