I’ve recently heard a number of colleagues and friends toss out the term “principal investing” in conversation. For fear of sounding out of the loop, I haven’t asked them, but can anyone explain exactly what this is? I can’t find any information on it in the CFAI text, investopedia, or other sources…
Cigarettes and beer. You know, like what Middle School principals buy on their way home. Geez. Can’t believe you didn’t know that.
Seriously though, Sometimes corporate insiders or officers are called Principals… could have something to do with that, but I really don’t know.
When you act as a principal you are selling securities from house accounts vs. when you are a broker you are finding the securities for the client…more or less.
sounds like it would be the same as principal trading.
Hmm…I appreciate and respect your responses, but I don’t think they are right. Given the context of the conversation I was led to believe that it had something to do with private equity.
I think “principal investing” is nearly a synonym for “private equity” except it’s older. If there’s a difference now, I don’t know what it is.
A “pricipal” trade is done when a security is purchased out of inventory, for example your buy order is matched with a sell order on the house acct. You might get a better price but a “markup” is charges, which is higher then a commission. On the other hand, “Agency” basis is when the trade is done in the secondary market charged a regular commission.
Excuse me…???
kyle1984 Wrote: ------------------------------------------------------- > Hmm…I appreciate and respect your responses, but > I don’t think they are right. Given the context > of the conversation I was led to believe that it > had something to do with private equity. Sorry, I must have misunderstood your question. I thought this was in the context of trading.
the principal’s money - as opposed to clients’ money
principal investing in the context of an investment bank is like private equity… another name for it is is merchant banking now think trading vs. investing… one’s short term, the other is long term… From a quick google http://www2.goldmansachs.com/services/investing/private-equity/technology-investments/index.html
JoeyDVivre Wrote: ------------------------------------------------------- > I think “principal investing” is nearly a synonym > for “private equity” except it’s older. If > there’s a difference now, I don’t know what it is. I think the main difference these days is that “private equity” typically implies that you’ve raised a fund whereas “principal investment” may just be a company run by an investor who raises capital on a deal by deal basis, or has funds, etc…
Investors these days just have no principles.