Yesterday I blogged about the terms overvalued and undervalued being the two most abused words in stocks analysis. If a stock has liquidity, the terms mean nothing to me. I have the investing scars to prove it.
When it comes to illiquid and private investments, valuation should be one of your top concerns…always. I have the investment scars from private investments to prove that one as well (see all my posts on CarsDirect.com )You can’t sell your investment the next day so you can’t get caught up in the euphoria like we do in the stock market.
Today I was reading about the good people at WordPress turning down $200 million …ballsy. BUT, they (Matt) can do that as they have raised a paltry amount at a good valuation for all parties.
I don’t plan on changing the world like young Matt, but if you do or if you make angel investments or invest in private companies, make sure you focus on valuations.