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by HWR_14 1540 days ago
Investors expect to make money from their investment, but not necessarily that it keep growing. For instance, investors in commercial real estate expect steady income and some appreciation. They do not expect hockey stick growth. (I'm talking about those buying commercial real estate, not developers).
1 comments
chaostheory 1539 days ago
I strongly disagree. In general, investors would like as much growth as possible. Otherwise, they will pull their investment. As for venture capitalists, they would like hockey stick growth. They don't invest in startups that don't have that potential. Let's not confuse donations with investments.
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HWR_14 1539 days ago
VCs invest in high-risk, high-reward investments. Retired people want steady returns with less risk. Investment vehicles exist on a spectrum. You cannot talk about "investors" as a single class with a single preference. That's how both government bonds and VC can exist.
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chaostheory 1539 days ago
You’re right, but stocks aren’t bonds. There’s increased risk which implies increased gains. If “investors” wanted low gradual returns, they would buy bonds instead of stock. Investors want continuous growth every quarter, which is why Wall Street tends to focus on the short term. I’m not defending the status quo. I’m just describing reality.
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HWR_14 1539 days ago
> If “investors” wanted low gradual returns, they would buy bonds instead of stock.

If you buy Google, Amazon or Facebook, sure. But there are also lower-risk stocks. You can invest in P&G or J&J which are all about selling the same products again and again and again to the same customers and slowly expand by acquiring smaller companies with a similar business model.

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chaostheory 1539 days ago
Yes, and investors of those companies expect constant growth. Bond yields are no where near good enough for these investors. Case in point, P&G and J&J stocks have yielded about 500% and 300% in value respectively since 2000. It’s even higher if you go back further.

Like it or not, that is reality. Ie if people want lower yields, they invest in different industries, companies, or financial instruments.

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