At the deCarta devCON conference, Jeff Rath of Canaccord Adams, an investment bank specializing in emerging markets, succinctly explained the current market bloodbath and what he forsees as the impact on the location-based services market.
Rath sees an unwinding of some of the macroeconomic dynamics for the first time in a long time. Leading up to this situation was a condition where inflation rates were trending lower and debt was cheap. This yielded an explosion of leverage and people bought a lot of things…much that they couldn’t afford, and that is becoming unwound.
"Macro economic dynamics are driving everything; companies are posting good and bad results but all stocks are trading down," said Rath. For much of the early part of the decade, Canaccord Adams’ Location Index, an index of publicly-traded location technology companies, outperformed the major market indices. In the last two years, that index has seen a huge decline where it now underperforms the market.
The hedge fund community is incredibly active in trading and represents 30-50% of the trading on any given day in the stock market. "Everyday you are hearing of hedge funds being liquidated en-mass," said Rath.
