INVESTING IN PRIVATE UNLISTED COMPANIES – THE EVOLUTION HAS COMMENCED….
It is human nature to overestimate the short-term impacts of any event or trend, and to underestimate the long-term impact. This commonly accepted behavioral trait applies to any discipline, but is particularly relevant in the financial markets we operate in today.
Witness the recent phenomenon of equity markets’ reaction to Trump’s tax policy; we are yet to see any detail, yet markets have fully priced in substantial earnings growth. In contrast, global markets almost uniformly underestimated the long-term impact of the GFC on global economic growth; economists have overestimated global growth every year since 2008.