Image Credit: Alex Nabaum
By Jason Zweig | Sept. 20, 2019 11:03 am ET
The biggest casualty of the postponed initial public offering for We Co., parent of the office-sharing business WeWork, isn’t the company or its bankers. It’s the myth that private markets are superior to public markets.
Investors have long been told that the stars of the financial universe are hedge-fund, venture-capital and private-equity managers. These supposedly visionary geniuses are said to be immune to the short-term thinking that poisons the public markets. Investment horizons should be longer, risks lower, returns higher.
Since 2008, pension funds, university endowments and other giant investors have poured roughly $2 trillion into private vehicles on that promise. Individual investors have seldom been allowed past the velvet rope—but, as the We debacle shows, that isn’t always a bad thing.…
To read the rest of the column:
https://www.wsj.com/articles/how-we-should-bust-an-investing-myth-11568991786
For further reading:
Books:
Victoria Ivashina and Josh Lerner, Patient Capital
Benjamin Graham, The Intelligent Investor
Jason Zweig, The Devil’s Financial Dictionary
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Little Book of Safe Money
Articles and other resources:
Eliot Brown, “How Adam Neumann’s Over-the-Top Style Built WeWork” (WSJ)
F.A. Hayek, “The Use of Knowledge in Society” (American Economic Review, 1945)
“Capital Raising in the U.S.: An Analysis of the Market for Unregistered Securities Offerings, 2009â€2017” (U.S. Securities and Exchange Commission)
Will Gornall and Ilya A. Strebulaev, “Squaring Venture Capital Valuations with Reality” (Journal of Financial Economics)
Will Gornall, “How Do Venture Capitalists Make Decisions?” (Harvard Law School Forum on Corporate Governance and Financial Regulation)
Paul Gompers et al., “What Do Private Equity Firms Say They Do?” (Journal of Financial Economics)
Michael J. Mauboussin, “Who Is on the Other Side?” (BlueMountain Capital Management)