But here’s the problem – past access to cheap capital.

After more than a decade of keeping interest rates near zero, the Federal Reserve is pretty much guaranteed to raise rates this year to try to hold back inflation and crush liquidity. Add to that continued supply chain issues, a decimated workforce, and the move to do everything online. And now add the crisis in Ukraine and we have a recipe for, let’s just say, a significant challenge. 

For a decade now, companies have used cheap money, ignoring the fundamentals of cash flow and profitability on the promise of future profits. Given the economic climate today, it’s not hard to imagine that companies using cheap capital to grow rapidly without making a profit will be not be looked upon favorably. These assets no longer look so sexy.

All this could usher in the start of a roaring bear market where investors will feel the pain of cheap-capital economics and deciding not to throw good money after bad. Many businesses may well go out of business. Years of cheap capital fueled dubious ideas with grandiose visions of future performance, think WeWork. Even Robinhood is feeling the pain of avoiding the fundamentals whose value skyrocketed on temporary motivation fueled by get-rich-quick thinking during the pandemic. 

As rates go up, debt gets more expensive, and suddenly, the question of “Can we actually make money?” becomes painfully urgent. You could say it will be a return to the fundamentals. So the days of meme stocks, SPACS with lax oversight, and accepting years of losses, well, those days may well be over. And all these unicorns? Well, they got to get their act together or face extinction.