Here’s a simple example. If you put $100,000 in a stock and it drops 33%, then rises 33%, you end up with about $80,000-something, not $100,000. After a 33% drop, it has to rise 50% just to get back to where you started. That volatility in the stock market is what hurts you over time.
Private equity deals aren’t volatile in the same way because they don’t trade every day. When the market gets jittery during a slow period, they don’t decline in value the way a publicly traded stock does. This excerpt is from our accredited investor luncheon in Irvine, California.
Key points
- A 33% loss followed by a 33% gain leaves you well below where you started.
- After a 33% drop, you need about a 50% gain to break even.
- Private equity doesn’t trade daily, so it avoids much of that volatility.
Accredited investors: learn about current opportunities at tickertapeinvestments.com.
