The Decade in Review: What Worked, What Didn't..
Written by Jay Turo on Monday, January 4, 2010
Look to the right for a fantastic chart that tracks investment returns for various asset classes over the past 10 and 20 years.
A few points immediately jump off the page:
So that is past. What will the next 10 years hold? Here are three predictions:
My answer - yes but. Yes - because the 2 key factors that drive angel investing outperformance remain the same. One, returns have to be very high as compensation for illiquidity - most angel investments are in private-held, small companies years away from a sale or an IPO. And two, returns are high as compensation for the EXTREME variance of the asset class.
Now for the but. While the asset class returned an average of 30%+, it was attained via the sum of a very, very few winners (aka Google), and lots and lots of losers.
Quite simply, a few investors made a killing, and a giant many got killed.
But here is where it gets interesting. The one thing that has and will continue to drive angel investing returns - namely technology advancements - now allows investors, for the first time, access to smoothed-out returns (i.e. higher likelihood of hitting the 30% average versus the extreme highs and lows).
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