One prices your asset every second the market is open. The other might not price it again for years - and that silence is not the same as stability.
11 min read
A private investment's calm, unchanging valuation is not evidence of safety - it is usually just evidence that nobody has been forced to test it against a real buyer recently, and a lack of visible volatility in a private holding should be read as a gap in information, not a feature.
Public markets are exchanges where anyone can buy or sell a security, and prices are set continuously by real trades. Private markets cover everything else - startups, private companies, many funds - where there is no exchange, no continuous price, and often a legal requirement (accredited-investor status, in many jurisdictions) to participate at all.
Because the two feel very different day to day in a way that misleads people. A public stock's price moves visibly and sometimes alarmingly; a private investment's value can look perfectly stable for years, and that stability is frequently mistaken for safety when it is really just an absence of information.
This is educational information, not investment, securities or financial advice. Rules differ by country and change — get advice from a qualified professional in your jurisdiction before acting.
Educational, not personalised financial advice. Nothing in the Investor Academy is a recommendation to buy, sell or hold anything — what is right for you depends on your own circumstances and the rules where you live.
Sources: U.S. SEC — Investor.gov; IOSCO — global securities regulators
An investor holds $10,000 in a public index fund and $10,000 in a private startup fund. Over a rough year for markets, the index fund's statement shows a 20% decline, updated every day - painful to look at, but honest. The private fund's statement shows no change at all, because its holdings haven't been revalued since the last funding round eighteen months ago. The private fund is not actually more stable; it is simply not being measured as often, and its true value may have moved just as much, or more.
The common mistake is treating a private holding's unchanging statement value as evidence it held up better than public markets during a downturn, and using that as a reason to prefer illiquid, opaque investments. The lack of a visible price is a lack of information, not a sign of resilience.
For any private holding, find out when the current valuation was set and by what event - a funding round, a sale, an appraisal - not just what number appears on a statement.
Between pricing events, treat the true value as unknown and probably different from the last stated number, in either direction.
Money locked up for years, with no ability to sell even if you need it, deserves a materially higher expected return to be worth choosing over a liquid public alternative.
Many private deals require accredited-investor status or similar, under rules that vary by country - confirm this before spending time evaluating something you may not legally be able to access.
Whenever comparing a public option against a private one, or interpreting why a private investment's statement value hasn't moved.
This isn't the lesson for evaluating whether a specific private deal is a good one - that's due diligence, covered elsewhere. This is about how to read the two kinds of market honestly.
When public technology stocks fell sharply in 2022, financial press widely reported that many private companies kept their prior funding-round valuations on the books for months afterward, since there was no daily trade forcing a new price. Some of the same holdings were later written down by investing funds once new financing rounds or sales eventually occurred.
A private valuation catching up to reality late does not mean the earlier decline didn't happen - it means it hadn't been measured yet.
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