Gerstner explains last four weeks of market decline through rising uncertainty driving up discount rates and risk premiums.
“So think about what we just talked about. It's all uncertainty. Yeah. When uncertainty goes up, discount rates go up, risk premiums go up, multiples come down, markets come down.”
Gerstner explains recent market decline as rising uncertainty increasing discount rates and compressing multiples.
“When uncertainty goes up, discount rates go up, risk premiums go up, multiples come down, markets come down. That's that's the explanation for the last four weeks in the market.”
Gerstner says CEO uncertainty from tariff negotiations forces real decisions on pricing and supply chains.
“They gotta make real life decisions about what do I do with prices, what do I do with my supply chain, etcetera.”
Gerstner describes exponential AI change creating fog of war where investors cannot predict 35 years of cash flows.
“Fog of war. I can't predict thirty five years into the future of those free cash flows, so I have to pull it in a little bit.”
Gerstner says software stocks are down 30-40% not from missing numbers but from investors seeing cloudier futures.
“They're all hitting the numbers. But what has happened is their stocks are down 30 or 40% because investors are saying the future is cloudier than it was just a few years ago.”