| > Plenty of investors have to wrestle with deciding if an investment will recover or continue to plummet. All investors should constantly be in consideration of if their investment is appreciating or depreciating in value and wrestle with that. Past value should in general not be a factor - unless the investor is a fool. Only future value is of interest. There are only two outcomes: Price goes up or price goes down. If you believe that the price will go up, you should invest more, no matter if you already have a profit or a loss. If you believe that the price will go down, you should sell, no matter if you already have a profit or a loss. What price you bought in at has no relevance. And this is the core of the matter that the journalist doesn't seem to understand. Fluctuations aside - which shouldn't be a big factor for unlisted companies. If I'm an investor and the manager of the PE firm gives me a loss of 50% instead of a 20% loss because he was waiting for "recovery" until it was too late - then I'm going to tar and feather him, together with all the other investors. > Your objections here feel very much like "the finance journalist left assumed some basic knowledge and reading comprehension skills anyone reading a finance article should already possess". They aren't writing for Wikipedia. No, but they are writing an article without any flesh on the bones, and twisting it into some kind of drama. Private equity firms are (allegedly) invested into more companies than they were a decade ago. Good! Not a big deal if the investors loose some money, they knew the risks if they weren't fools. Good that companies get investments. If they didn't want or need investments they wouldn't sell shares to private equity. |
| > There are only two outcomes: Price goes up or price goes down. And if you don't know which is going to occur, you may feel stuck. Indecisive, anxious, conflicted, call it whatever you like. > Only future value is of interest. Which is why sometimes the PE firms don't sell, as noted in the article. They think there's a chance the future value will be higher. They may be wrong, but right now they have to make an educated guess. > If I'm an investor and the manager of the PE firm gives me a loss of 50% instead of a 20% loss because he was waiting for "recovery" until it was too late - then I'm going to tar and feather him, together with all the other investors. Sure, and if it recovers and goes to the moon next month, you'll yell at him for being a chicken and losing you a bunch of money. > No, but they are writing an article without any flesh on the bones, and twisting it into some kind of drama. Physician, heal thyself. |
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| ▲ | carlosjobim 15 hours ago | parent [-] | | > Which is why sometimes the PE firms don't sell, as noted in the article. They think there's a chance the future value will be higher. They may be wrong, but right now they have to make an educated guess. Yes, but then they are just as "stuck" with their investments as my uncle is stuck in his car because he hasn't decided if he wants to get out of it or not. Hardly worthy of a newspaper article. It would be different if it was about assets where market movements or lack of market movements are important to the general public, such as housing, energy, big employers, etc. > Sure, and if it recovers and goes to the moon next month, you'll yell at him for being a chicken and losing you a bunch of money. He should of course sell at -20%, and then buy again at the bottom, if he doesn't want to get yelled at. Or sit with his diamond hands until it goes to the moon, and not run to the New York Times crying about being stuck. | | |
| ▲ | ceejayoz 14 hours ago | parent [-] | | > Yes, but then they are just as "stuck" with their investments as my uncle is stuck in his car because he hasn't decided if he wants to get out of it or not. Hardly worthy of a newspaper article. One person stuck isn't much of an article, sure. Thousands stuck might indicate something that has economic consequences worth making the news. > It would be different if it was about assets where market movements or lack of market movements are important to the general public, such as housing, energy, big employers, etc. I promise you, the PE ecosystem impacts the general public. Nearly every dentist, plumber, electrician, and vet in my area is PE owned these days. That's a lot of eggs in a basket. > He should of course sell at -20%, and then buy again at the bottom, if he doesn't want to get yelled at. What, with his time machine? You're criticizing a journalist for not knowing enough about finance and saying the fix is perfectly timing the market?! | | |
| ▲ | carlosjobim 11 hours ago | parent [-] | | The last part was of course a joke. I yell at my portfolio manager no matter what he does. But no serious investor should ever have "recovering losses" anywhere in their strategy or consideration. Either you think the price is going up or down, and then you consider fluctuations. And if you are happy to wait and believe it's going up, then don't complain about "being stuck". > One person stuck isn't much of an article, sure. Neither are 10 000 people being "stuck" because they can't decide to get out of the car or not. Or stuck in front of the fridge deciding what they want. If they want to get unstuck, it's up to them. > I promise you, the PE ecosystem impacts the general public. Nearly every dentist, plumber, electrician, and vet in my area is PE owned these days. That's a lot of eggs in a basket. Yes, because "private equity" is an extremely broad term. I wouldn't expect your local dentist or plumber to be listed on the stock exchange. What exactly is the problem for me or anybody else reading the article that some PE investors weren't able to get the return they had hoped for on their investments? Should I feel sorry for them? Should I send them part of my paycheck to ease their wounds? | | |
| ▲ | ceejayoz 10 hours ago | parent [-] | | > What exactly is the problem for me or anybody else reading the article that some PE investors weren't able to get the return they had hoped for on their investments? A widespread contagion in the industry would wipe out significant parts of the service sector, which we humans rely upon. > Should I feel sorry for them? Should I send them part of my paycheck to ease their wounds? The PE firms? Absolutely not. Fuck them. But as with the CDO mess, the damage won't stay with the Bain Capital types. They'll all be fine; it's the consumer who gets fucked. As the article notes, that includes things like pension funds. Your 401k, probably, too. What we should do is prevent this wealth transfer from the poorest to the richest shit from continuing to happen over and over again. |
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