Why 2020 or 2021 Is Your Time to Start A Fund

I was recently on a coaching call where someone said,

“Bridger. I want to start a fund, but it’s 2020. I don’t think it’s the right time…should I just wait a year or 2??

I think we can all agree 2020 hasn’t been the best year. There’s been killer hornets, natural disasters, protests, riots, a global pandemic…kind of crazy things going on in the world.

Nothing is stable right now, everything is changing. This is just as applicable when it comes to the financial markets.

Currently, we’re not in a bear market, we’re not in a bull market… We’re in what’s called a Kangaroo market. A kangaroo market is pretty much what the name entails, constantly going up and down!

You might think this is due to the revenue of businesses being so inconsistent due to the Covid19 pandemic…

However, Goldman Sachs recently came out with a article done by their economists that studied the relationship between the revenue and stock price of companies.

Turns out, businesses’ stock price and revenue in 2020 have had the least amount of correlation in history.

You’re probably thinking, “As a business, if revenue increases so should the stock”. Unfortunately, there’s actually only a 5% chance that will happen…

Stock price is only determined by the demand of buyers and sellers.

Stock Market

So how can we count on anything?? If the correlation is so small, investors’ chances of high returns in the stock market decreases drastically.

Fortunes have been made and lost this year in the stock market. It’s unpredictable!

If there’s no surety in the stock market, where will investors turn to?

Last year, there was $13 trillion in investments that had negative interest rates.

Can you believe that?!

Locking money up in government bonds or relying on the stock market…investors are realizing this is no longer the best way to go.

So they turn to alternative investments. There has been a rush of investors turning their money over to passive, long-term investing.

Think about it: Investors hate volatility. They are sick of the fluctuations that come with the stock market, especially recently. They’re looking for ways to diversify themselves away from the stock market.

In alternative investing you are essentially finding off market deals. They are deals on the Private Markets and not on the public markets.

And now you might say,

“Bridger that sounds great and all, but what about finding money??”

I’m here to tell you, that really doesn’t need to be a concern.

At the beginning of 2020, there was over $1.5 TRILLION of what’s called ‘dry powder.’

Dry powder is essentially capital that’s been committed to a fund, but is waiting to be deployed.

That number has risen in 2020!

Need more proof? Since Covid19 we have raised $905,000 for our fund. And I have a friend that has raised $15 million since the beginning of the pandemic.

Along with that, the fed is printing more and more money ($560 million, to be exact) every single day.

This is money that’s waiting to be invested, and going into the pockets of potential investors. I promise there’s enough money out there.

Don’t ask yourself, “Can I find the cash?” Rather, ask, “Can I find yield.”

If you find deals that can guarantee yield, you’ll find the money.

Investors are looking for higher ROIs, and once they do, they’ll dump their money in.

Find the deal, and you’ll find the money.

Use the crash to your advantage! Don’t let it stop you from taking steps that could define your financial future.

If you want any more information on exactly HOW to start your own alternative investment fund, feel free to join my webinar here.

Thanks for the read!

Bridger Pennington

DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.

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