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Private Equity: 4 Lessons For Value Investors

Stocks in this article: AINV APO KKR

4 Tips For Investors To Learn More About Private Equity by Tim Melvin, Benzinga

Most individual investors pay very little attention to what’s going on in the world of private equity.

The shadowy world of private equity and buyout investing is seen as the province of large institutions and well-heeled big money types — and of little interest to those looking to catch the next 10 point move in Apple.

It’s of even less interest of those middle of the road investors who have some stock and mutual funds in their retirement plans and just do not spend a lot of time thinking about the markets. While most will never have big money invested in private equity funds, tracking this industry should be at the top of every investor’s regular activities list.

Popularity Is Not Always Key

The first reason is that the private equity mindset is more successful than attempting to day or swing trade the well-known popular stocks. Study after study has shown that most traders will fail. The quoted number most often used is 90 percent of traders “just don’t make it.”

It’s extraordinarily difficult to be a good trader, much less a great one.

Related Link: 3 Reasons To Quit Trying For The Impossible With Your Investments

The simple truth is that, just like everybody who ever put on glove dreams of pitching in the World Series or playing center field in the big leagues, everyone who dreams of being a great trader probably is not going to make it.

Adopting the valuation sensitive, longer time frame of the private equity investor will help most investors earn much higher returns over time.

Opportunity Tends To Show Up Uninvited

The other reason investors should pay more attention to the private equity industry is that it will allow you to spot opportunities and trends before they make their way to Wall Street and into the mainstream media.

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