TINA is Past and TARA is Future.

At  the  time of Global Financial Crisis hit in 2008, Governments and Central Banks were left with no other option other than pumping money into the system through quantitative easing and keeping the lending rate as low as possible. The loose monetary and fiscal policy post-2009 made equities the most preferred asset class and money managers started to believe that There Is No Alternative (TINA) to equities and stocks. Any return better than the treasury rate was seen favorably. Keeping Money in banks or in Treasury bonds made no sense. The abundant liquidity in the hands of money managers, and diminishing opportunities in the public market, propelled funding in Private markets. Startups started getting overwhelming responses. Deployment of money became a priority over business viability. “Spray and pray” was the mantra. One successful start-up idea was enough to cover the write-off on nine failed startups.
Covid19 added fuel to the flame. Central banks’ concerted efforts across the globe by keeping the rates low and various stimulus measures further added to the liquidity rush. Saving humankind from the Pandemic was the single most important objective at hand. While the nations were busy fighting against the pandemic, they suddenly realized that another enemy called “Inflation” has grown in the backyard, and if not tamed can cause another crisis that no nation can afford.
Tables turned, and low-interest rates and liquidity became enemies. Ammunitions were deployed to tame Inflation. Central Banks across the globe started increasing rates, and cooling off the economy became the most important priority.
The last 9 months of efforts have not resulted in much respite in developed worlds.
The 10-year US treasury rate which used to be 0.7% in 2020 is now at 3.7%. Back home Fixed Deposit rates (usually seen as a benchmark by average Individuals and Households) are at 7.5% p.a. Investors and Money Managers have realized that There Are Real Alternatives (TARA). They have become risk averse. As humans, we love security in life and in Investments too. Money Managers now do not want to chase returns or “spray and pray” over the returns which are certain. This is going to create challenges for Fund Managers, Hedge Funds, VCs, and Listed Companies. The challenge of delivering a return that is better than Risk-Free Assets. Earnings Expectations from listed companies are likely to go up. The earnings projection rate will be re-defined. Startup funding has gone down drastically. Revenue and Profitability are back in vogue. Businesses with longer gestation to profitability will lose investor interest. We have seen this in the recent correction in New Age Tech stocks in the US.
The effects of TARA have started becoming visible. Turbulent times ahead, fasten your seat belt and listen to “Bolo TARA ra ra….” as currently and Future of Economy.