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Someone in the public market could lose a lot, but they also have the option to sell at any time, preventing losses. Private markets with no liquidity will simp
by bluedevil2k 12y ago
Someone in the public market could lose a lot, but they also have the option to sell at any time, preventing losses. Private markets with no liquidity will simply cause total loss, as selling is not even an option.
- adventured 12y agoBeing able to sell at any time is of course understood, and that in no way prevents the kind of ignorance that leads to total losses in the public market. Investors often ride investments down, telling themselves in a delusional fashion that their investment will turn around if they just hold out. This occurred rampantly during the collapse of the Nasdaq in 2000/01. Or companies like Bear Stearns or Lehman, that vaporized in a matter of weeks (Bear went from like $60 to $2 in two trading days), essentially completely wiping out public shareholders. Worldcom and Enron are other similar examples. It's also quite easy for investors to play with options in the public market and rapidly lose everything. All it takes is filling out one form.