Contrary to popular belief, the market may be getting less efficient. The dominance of indexing, quant funds, and multi-manager pods—all with short time horizons—creates dislocations. This leaves opportunities for long-term investors to buy valuable assets that are neglected because their path to value creation is uncertain.

Following a sharp market downturn driven by trade war fears, retail investors immediately framed it as a buying opportunity. This highlights a deeply ingrained "buy the dip" mentality, suggesting retail sentiment is remarkably resilient and perhaps less reactive to macro fears than institutional money.

The massive amount of cash in money market funds isn't from investors selling equities. Instead, it's a direct result of high government interest payments creating a 'cash bubble.' This capital is likely to be forced into risk assets as rates decline, providing significant future fuel for the market.

An estimated 80-90% of institutional trading is driven by quant funds and multi-manager platforms with one-to-three-month incentive cycles. This structure forces a short-term view, creating massive earnings volatility. This presents a structural advantage for long-term investors who can underwrite through the noise and exploit the resulting mispricings caused by career-risk-averse managers.

The traditional, long-term venture capital cycle may be accelerating. As both macro and technology cycles shorten, venture could start mirroring the more frequent 4-5 year boom-and-bust patterns seen in crypto. This shift would force founders, VCs, and LPs to become more adept at identifying where they are in a much shorter cycle.

Contrary to classic theory, markets may be growing less efficient. This is driven not only by passive indexing but also by a structural shift in active management towards short-term, quantitative strategies that prioritize immediate price movements over long-term fundamental value.

For a multi-trillion dollar manager, agility isn't about small trades but leveraging scale for superior market access and research. The key is acting early to identify risks or opportunities before liquidity dries up, effectively using information advantages to front-run market stress.

The post-COVID era of high government spending has ushered in a new economic paradigm. The elongated 10-year cycles of 1980-2020 are gone, replaced by shorter, more intense two-year bull markets followed by one-year downturns. This framework suggests we are currently in the early stages of a new up cycle.

Asset allocation should be based on liquidity cycles, not economic cycles like GDP growth, as they are out of sync. An increase in liquidity precedes economic acceleration by 12-15 months. Strong economic data can even be a negative signal for asset markets as it means money is leaving financials for the real economy.