Too many investors “vote” repeatedly. They don’t practice the buy-and-hold discipline espoused by Mr. Buffet. On an average day, 3-4 billion shares change hands in NYSE composite trading. Even worse, too many investors rush in following market run-ups and then sell in a panic as prices plunge. In the midst of some recent volatility, small investors have even lost small fortunes simply waiting minutes for trades to be executed. High speed traders rely on split second moves.
Venture capital investment, on the other hand, is far less susceptible to short-term price and valuation fickleness. It is long-term by nature, not intended for short-term trading, so you’re unlikely to shoot yourself in the foot like you can do in the publicly traded securities markets. Its values are based more on a venture’s long-term financial valuation rather than on short-term market vagaries.
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