For all the hand-wringing over the private equity overhang, most problems seem confined to the large buyout space; things look a sight better for mid-market funds, some of which may be poised to capitalize on opportunities created by the credit crisis.
Given the numerous headwinds facing the U.S. venture industry, at the moment we believe venture capital makes sense only for the small subset of investors fortunate enough to have access to select high-quality managers running appropriately sized funds.
While prices are clearly more attractive than in the recent past, the massive debt overhang in the sector will not only hamper price recovery for some time, but could cause significantly more short-term pain.
For all its flaws, the Eurozone is currently more beneficial than costly to member countries, and thus it is very unlikely the euro will break up anytime soon.
While recent declines have undoubtedly restored some value to REIT prices, we still believe a cautious stance is warranted due to the deteriorating economic environment and the sector’s huge refinancing needs.
While it is only natural to crave safety after periods of intense volatility, we do not believe investors should respond to recent market declines by panicking, scrapping their policy portfolio, and hunkering down in cash (with the obvious exception of excess cash necessary for near-term capital call, spending, and other liquidity needs).
While prices have fallen sharply over the past year, the sector still faces stiff headwinds from high valuations, a weakening economy, and tightening credit for buyers.
While many pundits expect the financial sector’s problems to remain “contained,” we not only expect the bear market to spread beyond financials, but believe the economic damage may be greater than that inflicted during the downturn of 2000–03.
While a large segment of the U.K. equity market is exposed to direct of knock-on effects of house price declines, this is not reflected in current prices.
The European Central Bank has been far less hawkish than advertised; as a result, Eurozone prices may rise faster than most expect.