When a public company suffers a financial meltdown, what are the ripple effects?
What are the different levels of exposure among the varying levels of investors and holders of financial instruments? To predict the impact of a future financial meltdown, one only has to look back at some recent financial disasters to have an idea of how the next disaster will play out.
Investing in private placements is not for everyone. They may not be right for you. Let’s see if you relate more closely with James or Jimmy.
James and Jimmy are brothers, but the two couldn’t be more different when it comes to investing and even in their personal finances. Does that sound like you and your siblings?
When was the last time you saw two competing mobile home parks across the street from one another or even on the same city block?
The answer is likely never, because like you, we have never seen this phenomenon. We’re not saying it doesn’t exist. We’re just saying that in all our years of investing in this space, we’ve never seen it.
Conventional investing is a pretty dull game. You purchase your index funds or shares of stock on your own and forget about them or in the case with many investors, your financial adviser purchases stocks on your behalf and often times they’re already sold before you even hear about them.
While true diversification is a critical component for a successful portfolio, I would argue the number one reason to invest in private placements is the benefit of above-market returns combined with below-market volatility.
Cambridge Associates, an index that tracks private equity performance, reports that since 2000, Private Investments experienced an impressive 16% annual return compared to 7.4% from the S&P 500.