July 28, 2021

Market Memes Could Troll Private Investors

If the secondary market opens up to non-professionals, that could mean many of the same risks currently facing public market investors could spread to private markets as well: Traders could buy up interests in a fund one day and then dump them the next. “You could start to see bubbles forming—and popping—in private equity,” Higgins says.

As a result, private investors may need to monitor areas that their counterparts in public markets are familiar with—like social media mentions and other signals that could presage unexpected position purchases or sell-offs in secondary positions. “You’ll want to have data scientists, quants and developers as part of your firm,” Higgins says.

It’s not just secondary transactions where private equity firms could become vulnerable to crowds of untrained investors. Another area is commodities.

Trading platforms like ETrade allow…

Read full article here: middlemarketgrowth.org