Sequoia’s VC Doug Leone Warns of Downturn Worse Than 2000 or 2008

Key Takeaways:

  • Doug Leone predicts a prolonged drawdown for stocks.
  • According to his prediction, risk-on assets might recover in 2024.
  • Wall street experts agree with the bearish outlook.
Sequoia's VC Doug Leone Warns of Downturn Worse Than 2000 or 2008

YEREVAN (CoinChapter.com) – The stock market has suffered heavy losses since Jan 2022. As a result, the S&P500 index (SPX) gave a choppy performance and stood at a 16.5% loss year-to-date after bottoming out in October and subsequent partial recovery. However, experts believe another storm is coming. Doug Leone, a partner at Sequoia Capital venture firm, reiterated the fears.

stock market S&P500 (SPX) performance since Q4,2021.
S&P500 (SPX) performance since Q4,2021. Source: TradingView.com

Worse than 2000 and 2008, says Doug Leone

Speaking onstage at the Slush startup conference in Helsinki, Finland, billionaire Doug Leone assessed the current drawdown, predicting a grim continuation.

The situation today I think is more difficult and more challenging than either ’08, which was really a protected financial services crisis, or 2000, which was a protected technology crisis.

said Leone.

Moreover, the expert noted a multitude of factors that influenced the stocks this year and will likely continue to do so throughout the next quarter. Doug Leone cited several key reasons for the “global crisis.”

For example, the rising interest rates around the world caused economies to slow down in an effort to stave off rising inflation. “Geopolitical challenges” and the subsequent “energy crisis” also contributed, hindering the stock market recovery.

Stocks won’t recover until 2024

Furthermore, Doug Leone does not see confident economic growth until 2024. The expert also noted that market participants were ‘spoiled’ by the bullish market in the previous years and haven’t learned how to make tough decisions.

My forecast is that we’re not going to get away with this very quickly. If you turn back in the 70s, there was a malaise of 16 years. Even if you go back to 2000, a number of public companies didn’t recover for 10 years.

commented the billionaire.

He also added that investors should be ready for a “prolonged” crisis time, where consumers might run out of money and face “increasing demand.”  Joanne Hsu, consumer surveys director at Michigan University, backed the claim, citing consumer sentiment data.

Along with the ongoing impact of inflation, consumer attitudes have also been weighed down by rising borrowing costs, declining asset values, and weakening labor market expectations

asserted the expert.

Also read: Bitcoin’s Collapse Is Close, Says Daniel Jones a Crypto Analyst.

Experts agree with the grim outlook.

Meanwhile, Wall Street is also worried, trying to identify the source of the coming “rapture.” For example, Jamie Dimon, the chief executive of financial giant JPMorgan Chase, has been ringing bearish bells since Q2.

If you make a list of all the prior crises, sitting here we would not have predicted where they came from, though I think you could predict at this time that it probably will happen. So if I was out there, I’d be very cautious..

said the CEO.

Conversely, BMO Capital Markets’ chief investment strategist Brian Belski was optimistic in his prognosis. The expert has a year-end price target of 4,300 on the S&P 500, which implies the index could gain another 8% or so through the end of this year.

The market is like a coiled spring. I think the market is going to continue to…climb higher. I do really think that there’s a good shot that we’re going to be well above 4,000 [on the S&P 500] at year-end.

commented Belski.

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Doug Leone, Sequoia’s VC Doug Leone Warns of Downturn Worse Than 2000 or 2008

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