MarketWatch reports that historical data points to a continuing stock bull market even if the Federal Reserve raises interest rates again this week. However, the analysis cautions investors to take defensive precautions as long as rate hikes remain on the table.
While public equities might maintain momentum through sheer earnings inertia, persistent rate hikes inevitably reset the risk-free rate, driving up the cost of capital across all asset classes. Higher rates mean higher discount rates, which compress public multiples and inevitably trickle down into private markets. Late-stage valuations soften first, but the downstream squeeze eventually hits early-stage pricing and slows down overall venture deployment.
For startup founders, this means the era of relying on cheap follow-on capital remains closed; burn multiples and path-to-profitability matter far more than top-line narrative. For individual backers allocating from £500 up, a prolonged tightening cycle shouldn't mean pausing investments, but rather seeking out businesses built to survive higher hurdle rates without needing constant dilution.