I previously spoke about the difficulty for GPs to raise in this economic climate. All in all, I believe it is because high net worth people feel “less rich.” If they were heavily invested in equities in a diversified portfolio, they could see a 25%-30% haircut to their net worth. That is a good case.

Now, these individuals are seeing themselves as 75% of what they once were for those six months in 2021. They feel less affluent. So now they feel like they need to get back to “even,” up an additional 25% higher. The problem with this logic is that the person assumes those months at the peak were their steady state when that was a fringe case. As of July 29th, the S&P’s PE ratio was 20.87. The median PE ratio is 14.89 over time. The PE ratio in January of 2021 was 39.96. Right now, we are reverting to the mean.

If people wait until they are back to 6-months ago, they will be waiting for quite a while. This is a very retail investor-driven mentality. Suppose you didn’t take profits at the top, then that’s on you. How I look at it today is what is the best asset to bring growth to my portfolio over the next 5-10 years. I am continuing to shift my high public equity exposure into three categories.

1) Early Stage Technology Investing

2) Credit

3) Industrial Real-Estate