Private market investing: How to carpe diem during a volatile market

When the public market gets roiled by volatility, retail and institutional investors alike are faced with the same question: what now? Inflation, rising interest rates, geopolitical tensions, tech sector corrections and fears of a recession have all contributed to the public market’s recent turbulence. But rather than retreat to the sidelines, savvy investors see possible opportunity—they carpe diem—by turning their attention to the private market.

In this article, we’ll explore how investing in private companies can offer a potential strategy for those looking to navigate uncertainty and unlock possible opportunities in a rapidly evolving financial environment.

A shift in the investment mindset

Historically, access to private market investing was limited to accredited investors, venture capital firms and institutional giants. But that’s changing. Today, platforms like Forge are helping investors tap into a previously inaccessible and opaque asset class—private companies—without waiting for a traditional IPO.

Why is this shift gaining momentum now? Because, sometimes, volatility breeds opportunity and private market investments have the potential to offer benefits that can act as a counterbalance to the daily swings of the public market.

Why volatility makes the private market appealing

During times of market upheaval, publicly traded assets tend to experience significant valuation fluctuations. Public tech giants, once considered market darlings, can lose billions in market cap overnight.

Private companies, by contrast, are not necessarily marked to market daily reports. Their valuations can often be more stable, based on long-term fundamentals rather than short-term sentiment. This insulation from daily market noise can be a source of strength:

• Reduced exposure to short-term volatility
  Private company shares are not subject to the 24/7 news cycle and investor reaction that drive public markets. This means that investors can take a longer view—focusing on business fundamentals rather than headlines.
• Potential for meaningful long-term growth
  Many of today’s most iconic companies—from Airbnb to Stripe—spent years in the private markets before going public. Investing during the growth phase, before a company reaches maturity, can provide access to significant upside potential.
• Diversification beyond public equities
  Private investments offer exposure to different industries, stages of business maturity and risk profiles. This diversification can be especially valuable when traditional asset classes are underperforming or tightly correlated.

In fact, in Forge’s recent Private Market Update, it highlighted that the Forge Private Market Index (FPMI) and Forge Accuidity Private Market Index (FAPMI) demonstrated significant resilience compared to the SPY ETF, which tracks the public S&P 500.

What’s more, last month, the FPMI outperformed the SPY by 10.8%, while the FAPMI outperformed by 6.1%. Forge Data also revealed that the private market held steady even through early-April volatility, when contrasted with the public market.

What to look for in a private market investment opportunity

Of course, private market investing isn’t without its risks. Limited liquidity, sometimes none at all, potential loss of your investment, and longer investment horizons are factors that must be considered. That said, there are a few ways to recognize potential opportunities and mitigate risk. The following are some to consider when contemplating a private company investment:

• Track record and leadership
  Does the company have a strong management team with a history of strong execution? Is it backed by top-tier venture capital firms or other noteworthy investors?
• Revenue growth and market fit
  Is there a demonstrable product-market fit and evidence of growing demand? Revenue traction and customer retention can be key signals.
• Exit potential
  While the IPO window may be somewhat narrow today, private companies seem to have more options than ever: M&A, SPACs, direct listings and secondary market liquidity events are all options on the table.

Carpe diem: seizing the moment with Forge

In volatile markets, patience and perspective can become an investor’s greatest assets. While it may feel counterintuitive to invest in private companies while others are retreating from public securities, those willing to carpe diem have the potential to find themselves in a position to capture long-term returns.

Forge has built a platform that makes private market access more transparent and streamlined. Through Forge, accredited investors can browse private listings, access historical data and trading volume, and make informed decisions with greater confidence.

Whether you're looking to diversify your portfolio, access high-growth private companies or simply explore new asset classes, Forge provides the infrastructure to turn uncertainty into potential opportunity. Want to learn more about accessing private market opportunities with Forge? Visit our marketplace to explore trading opportunities and research the private companies that are shaping tomorrow’s economy.