Introduction to Public Equity

Risks of public equities

Of course, nothing comes without trade-offs. With public equities, volatility is the price of admission. Markets can swing wildly based on everything from economic data to geopolitical events to a poorly worded tweet from a CEO. That liquidity I mentioned earlier? It's a double-edged sword—it makes it easy to panic-sell during downturns, which is exactly when you should probably be holding steady or even buying more.

Public markets can also feel like a crowded party where it's hard to find an edge. With millions of investors and sophisticated algorithms analyzing every piece of available information, stocks are generally priced efficiently. Finding truly undervalued companies requires either specialized knowledge or a healthy dose of luck.

Then there's the short-term thinking that often plagues public companies. When management is fixated on hitting quarterly numbers to keep shareholders happy, they might skimp on long-term investments that would create more sustainable value. You might find yourself owning shares in a company that's mortgaging its future to look good in the present.

How does Private Equity compare?