Now that you understand public markets, here's a crucial distinction: there are actually two main types of investment markets in our economy.
Public markets, which we've explored, and private markets. Each serves different purposes and operates by different rules.
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Can you guess what might make a market "private" versus "public"?
Private markets are where investments happen away from public exchanges. Think venture capital funding for startups, private equity buyouts, or wealthy individuals investing directly in companies.
These deals happen behind closed doors between specific parties, not on open exchanges like the NYSE.
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What companies can you think of that might use private funding?
The biggest difference is accessibility. Public markets are open to anyone with a brokerage account - you can buy Apple stock with $100.
Private markets typically require millions of dollars and "accredited investor" status. They're exclusive clubs for the wealthy and institutions.
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Why do you think private markets have such high barriers to entry?
Liquidity is another major difference. In public markets, you can sell your Apple shares instantly during market hours.
In private markets, your money might be locked up for years. No daily trading means no quick exits when you need cash.
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Which type of liquidity would you prefer as an investor?
Transparency varies dramatically too. Public companies must publish quarterly financial reports, host earnings calls, and disclose major events immediately.
Private companies share detailed information only with their specific investors. The general public knows very little about their finances or operations.
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What is one advantage or one disadvantage of public market transparency?
