Many times, people are unclear what this means. The wealthy invest their money in resources and salaries for other people, in order to create a product that may create more wealth for the company. In the startup world, this is extremely high risk for extremely high reward.
The appetite for risk has been reduced now, and the stock market is still near an all-time high, which means that the wealthy are shifting away from high-risk investments for lower risk investments that have a more guaranteed reward.
That will not bode well for many of these technology stocks that have sky high valuations of 400-900 PE, regardless of their growth rate.
Startup investment is cooling. Valuations are falling. But many investors and entrepreneurs haven’t yet grasped the reality that there is a correction in the offing, writes Christopher Mims.
Read Full Story: This Tech Bubble Is Bursting – WSJ