top of page

The ‘Roar’

The term ‘equity’ in financial markets has a fairly clear definition. According to Merriam Webster, equity is a:  the money value of a property or of an interest in a property in excess of claims or liens against it, b: the common stock of a corporation, or c: a risk interest or ownership right in property.

Most people are quite familiar with the first definition of equity – a - think ‘home equity.’ How much is the house worth in a sale, minus what is owed on the mortgage and other debts, and voila! your home equity is calculated, basically.

When financial professionals use the term ‘equity’ or ‘equities’ more broadly, they are referring to definition ‘b’ above – the common stock of a corporation. However, any investment professional would be considered imprudent, if not downright foolish if they didn’t consider the ‘a’ definition before electing to buy the stock of any corporation.

Private equity, another form of equity ownership that has grown to a significant slice of economic activity, is when a group of investors (working for their investors) buys out all the equity of a corporation. Doing so comes with control but without any of the compliance, price swings, or shareholder interference that is required of a publicly traded company. Often, these buyouts are done with significant debt, which amplifies returns – for better or for worse.

2022’s markets are another reminder of the ‘c’ above. The first half of this year has been the worst six months in decades on asset prices, especially equities, but bonds and commodities too. Driven by fears on inflation, worries about recession, and ongoing war in Ukraine, it has been a miserable half-year. Still, if you place the performance of the markets under a microscope, the movement, as always, has been driven by stock prices going down, but not necessarily correlative with actual earnings going down. The ‘market’ is forecasting that earnings of some companies are going to go down more in the future and therefore, it won’t pay as much for the common stock today. The ‘risk’ in risk interest has returned after being somewhat dormant for a little while.

When thinking about owning equities, the analogy to home equity is useful if not perfect. While on a technical basis, home equity values hit new peaks nationwide sometime in 2021, I know of no one who sold a home because the value had risen. The calculus of staying in a home clearly contains more than just the monetary value of the equity in the property. For individuals and families, ownership of stocks as part of a long-term financial plan that is multi-faceted and potentially, multi-generational, can be thought of in a similar way. Selling stocks, like selling a home, is ordinarily driven by life events, reallocations, or long-term planning considerations. The relative values in the middle are noise that can undermine long term goals if we pay too much attention to them.

Finally, equity, in 2022 goes far beyond the above. Social equity is evolving in many ways for the better and in other ways that are seemingly deprivative. If there’s one thing about equity, however defined, that will always remain true – it is that its volatility will be high. As always, please give us a call to review your portfolio or anything else financial in your life. We wish you an enjoyable summer!


Scott Lasky, CFP™

Lionshead Wealth Management, LLC is an investment adviser in New York. Lionshead Wealth Management, LLC is registered with the Securities and Exchange Commission (SEC).  Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission.  Lionshead Wealth Management only transacts business in states in which it is properly registered or is excluded or exempted from registration.  A copy of Lionshead Wealth Management 's current written disclosure brochure filed with the SEC which discusses among other things, Lionshead Wealth Management's business practices, services and fees, is available through the SEC's website at: Past performance is not an indication of future results. Please note, the information provided in this document is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Please refer to the disclosure and offering documents for further information concerning specific products or services. Nothing provided in this document constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction. This document may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio's operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of Lionshead Wealth Management or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.

bottom of page