Why Excitement Is a Dangerous Investment Metric

Some investments make people excited.

The story sounds great.

The market is growing quickly.

Everyone seems to be talking about it.

The projections look impressive.

And suddenly, the question changes from:

“Is this a good investment?”

to:

“How quickly can I get in?”

That shift can be dangerous.

Excitement can create momentum. But momentum isn't the same thing as value.

In investing, especially in private markets, I think one of the biggest mistakes is allowing the excitement around an opportunity to become part of the investment thesis.

Because excitement is emotional.

Fundamentals aren't.

A great story isn't necessarily a great investment

Investors are naturally attracted to stories.

A company disrupting an industry.

A new technology changing consumer behavior.

A real estate market everyone expects to take off.

A founder with an ambitious vision.

There may be a very real opportunity behind the story.

But the story should be the beginning of the analysis—not the conclusion.

Before getting excited about an investment, I want to understand the fundamentals.

How does the business actually make money?

What does the balance sheet look like?

Is there real demand?

What happens if growth slows?

How much capital will the company need before it becomes self-sustaining?

And perhaps most importantly:

What could go wrong?

Those questions aren't as exciting.

They're often much more important.

Excitement can make expensive investments look reasonable

One of the biggest problems with excitement is that it can change how people think about price.

When investors become convinced that an opportunity is exceptional, they can start justifying almost any valuation.

The logic becomes:

"Yes, it's expensive—but this is different."

Sometimes it is different.

But sometimes the market has simply become very good at telling everyone the same story.

This is where discipline matters.

A strong investment isn't necessarily one where you can tell the most compelling story.

It's one where the potential return makes sense relative to the price you're paying, the risks you're taking, and the alternatives available.

That sounds simple.

It isn't always easy.

The most interesting opportunities may not be the most exciting

This is one reason I find private markets particularly interesting.

Some of the best opportunities don't come with a lot of attention.

They might involve an established business that needs better operations.

A real estate asset that needs repositioning.

A company with good fundamentals but limited access to capital.

A situation where the market is focused on the problem while the investor is focused on the potential solution.

These opportunities can require more work.

There may be no obvious hype around them.

But that's often where the investment process becomes more interesting.

Instead of asking:

“What is everyone excited about?”

you can ask:

“What is everyone overlooking?”

That's a very different question.

Excitement is useful. It just shouldn't make the decision.

I'm not saying investors should ignore excitement.

Sometimes excitement is telling you something.

It can signal changing consumer behavior, technological innovation, new demand, or a market that's beginning to shift.

The mistake is treating that excitement as proof.

Interest gets your attention.

Fundamentals earn your conviction.

And execution ultimately determines whether the investment thesis works.

That distinction matters.

Because markets don't reward you simply for identifying something exciting.

They reward you for getting the investment decision right.

What I look for instead

When an opportunity gets a lot of attention, I try to slow the process down rather than speed it up.

I want to understand five things:

1. The fundamentals

Is there a real business, asset, or economic opportunity underneath the story?

2. The downside

What happens if the assumptions don't play out?

3. The price

Even if the opportunity is attractive, are you paying a price that leaves room for error?

4. The operator

Who is responsible for executing the strategy, and do they have the experience to do it?

5. The path to value creation

Is there a clear way to make the business or asset better over time?

These questions don't guarantee a successful investment.

Nothing does.

But they can help separate an investment thesis from an investment trend.

Don't confuse attention with opportunity

The investment world is constantly producing something new to get excited about.

Some of those trends will become major opportunities.

Others won't.

The challenge isn't avoiding every exciting investment.

It's knowing when excitement is supported by fundamentals—and when excitement has become the investment thesis itself.

I've always believed that good investing requires the ability to step back when everyone else is leaning forward.

Sometimes the opportunity is where the market is paying attention.

Sometimes it's where the market isn't.

The important thing is knowing the difference.

Excitement can tell you where to look. It shouldn't tell you what to buy.

What do you think investors tend to overvalue when a market or investment becomes exciting?

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John Jezzini

Private Equity | Real Estate | Private Capital