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Growthink Blog

Five Mega Trends That Are Transforming Private Equity Investing As We Know It

Print Written by Jay Turo on Sunday, August 30, 2009
Categories:

Did you know that in the last 10 years, every major stock market index has LOST investors money?

That's right, on an inflation adjusted basis, the Dow, S&P, and NASDAQ have each given investors NEGATIVE returns.

And with all of the meddling in the markets coming out of Washington, prospects for the next 10 years aren't any brighter.

Fortunately, there is a better way. In those same 10 years, while stock market investors made nothing or took a bath, early-stage private equity investors earned over 30% annually.

Why is This?

Efficient markets theory teaches us that private equity will always out-perform the public markets. Investors must be given higher rates of return to compensate for the traditional illiquidity and high variability of the asset class.

And up until recently, access to quality early-stage private equity return vehicles has been a) cost and time prohibitive for most institutional investors and b) simply inaccessible to the smaller, individual investor.

The Times They Are A Changin'

Luckily, this is no longer the case. Five mega-trends have coalesced to transform private equity investing as we know it:

1. The ability to source, research, and monitor deals via the Internet

2. The ability to take a data - versus a personality - driven approach to deal diligence

3. The ability to better price deals utilizing regression analysis

4. The ability to exit deals faster - both via alternative investment trading platforms like Second Market - and also simply because of the increasing velocity of business, especially technology business.

5. The ability and opportunity to properly apply "black swan," or "randomness" modeling to deal diligence

Best regards, and look forward to connecting.
--
Jay Turo
CEO
Growthink, Inc

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  P.S. Are you prepared to be saying in 2019 - "Darn - It has now been 20 years since I made any money with my investments?" The world has changed - time to change with it.


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