Can You Be a Boglehead Tech Investor?
A reader, Most of my friends work in tech and while they understand the Boglehead philosophy, the concern is that there is limited upside in public equities and most of the value is captured while companies are private these days. If the most valuable new companies increasingly create their biggest gains while private, will traditional... The post Can You Be a Boglehead Tech Investor? appeared…
Public equity investors may be missing out on significant value creation as many companies are remaining private for longer periods. The rise of unicorns, companies worth over $1 billion, has grown to over 1,800 worldwide, valuing a collective $9.2 trillion. Despite this, the stock market has thrived, with the tech-heavy Nasdaq 100 delivering a remarkable 20% annual return over the past 15 years.
Companies like Nvidia have seen extraordinary growth, with a 14,000% increase in value over a decade. However, many of these private companies were acquired by established tech giants like Microsoft, Amazon, Google, and Nvidia, indicating a trend of consolidation. While venture capital investments have yielded significant returns for a select few, the majority of start-ups fail within five years, and their performance after going public has been underwhelming.
Private market investors often overvalue these companies, leading to inflated prices. Nonetheless, Bogleheads can still invest in tech stocks while understanding that venture investments carry significant risk.
Written by urgent.news from A Wealth of Common Sense's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
