Private vs. Public Companies

The Good News / Bad News Part

The good news is that all these factors: short term bias, emotions, panics and infotainment basically make a mockery of Efficient Markets and Rational Market Participants – and that creates valuation “errors” which real investors can capitalize on. These investors are the proverbial “smart money”, who step into the bedlam and “buy when there’s blood in the streets” and sell when everybody is euphoric.

They buy companies for a fraction of their intrinsic worth.

They are often ridiculed and usually solitary. They are the minority of market participants.

The bad news is that the for the majority of market participants, they collectively comprise “The Dumb Money”, which chases stocks after they move, sell out in panic after they crash, buy companies in hopeless disrepair because a talking head on television told them to, or are invested in yesterday’s fads because their fund managers followed the rest of the herd off a cliff. You are probably a member of this class. Sorry, but it’s true. So was I (once).