Want Venture Capital-Like Gains? Read This…

Palm Beach Daily

Want Venture Capital-Like Gains? Read This…

By Grant Wasylik, analyst, Palm Beach Daily

Since the beginning of the year, we’ve seen the market crash as much as 34% and rally as high as 52%. And the S&P 500 closed at a new all-time high on Tuesday (previously set back in February 2020).

Despite the damaging effects the coronavirus pandemic has had on the Main Street economy… the market continues to shrug them off and charge higher.

So it’s no surprise many investors are scratching their heads in disbelief…

But the reality is, only a tiny fraction of the 19,000-plus publicly traded stocks in North America make up most of the market’s gains.

According to one study, over the past 100 years, just 4% of stocks have accounted for nearly all the profits of the market each year. (So far this year, stocks like Amazon, Apple, and Microsoft have done most of the heavy lifting.)

And over the next few years, that number may shrink even more.

Today, I’ll show you why – and, more importantly, how you can profit despite the odds…

Public Companies Are Vanishing

Over the past two decades, nearly half of the publicly traded companies in the U.S. have vanished…

chart

According to the World Bank, the number of U.S.-listed companies dropped from a high of 8,090 in 1996 to 4,744 at the end of 2019.

But it’s not just the World Bank seeing this…

The Wilshire 5000 Total Market Index is the oldest measure of the entire U.S. stock market.

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When the index launched in 1974, it had 5,000 stocks. It grew as high as 7,562 in 1998. But by the end of 2019, the index had been cut by more than half – to 3,473.

This trend isn’t set to reverse, either. Global consulting firm McKinsey & Company projects 75% of S&P 500 companies will disappear over the next decade.

So what’s causing so many U.S. companies to disappear?

The Incredible Shrinking Stock Market

The main reason we’re seeing fewer publicly listed companies is because they’re staying private much longer.

As you can see in the chart below, in 2018, the average company stayed private for 12 years – three times longer than in 1999.

chart

Companies are staying private longer because it’s more profitable for them. And when they eventually go public, they’ll do so at much higher valuations.

As you can see in the chart above, from 1999 to 2018, the average market cap of private companies at the initial public offering (IPO) has jumped 294%.

For mom-and-pop investors, it’s a double whammy. There are fewer public companies to choose from (meaning fewer opportunities to make profits). And buyers pay a lot more for companies when they go public.

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Meanwhile, early investors laugh their way to the bank. They’re making big profits by off-loading private companies with massive valuations onto an unsuspecting public.

So if you really want to build your wealth, you’ll need to consider investing in private equity. But until recently, the elite walled off this $5 trillion-plus market from ordinary investors.

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“Mr. Market is a Trickster”

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As the old-timers say on Wall Street, “Mr. Market is a Trickster.”

He draws as many people as possible into his trap. And then it springs shut. Then, to make sure he captures as much “dumb money” as possible, he pretends to back off, so stock prices rise. People say, “Buy the dip.” “The worst is over.” “It’s back to normal.”

Then, he attacks again. That’s the way it went in 1929-1932, in 2000-2002, and in 2008-2009. The lesson? Here’s how the old-timers put it: Never try to catch a falling knife.

There is big money to be made by simply putting your investments on the right side of the biggest financial event in history – the attempted bailout of the entire U.S. economy.

Don’t be fooled again.

Discover what Bill Bonner and Dan Denning are saying about it right here
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Invest in This Growing Market

According to Bloomberg, the private market has over $5.5 trillion in assets under management. So private companies can easily raise capital without going public.

And it’s paid off…

Over the last 20 years, the U.S. Venture Capital – Early Stage Index has returned an average of more than 86% per year. Yet most of the well-known stock indexes – like the S&P 500, Nasdaq, and Russell 2000 – have returned an average of less than 7% per year.

That’s not a typo. Early-stage, private companies have returned over 12x what public companies have during the past two decades.

And now, new rules from the Securities and Exchange Commission allow ordinary investors to get in the game and invest in private companies before they go public…

They’re called Regulation A+ offerings. You can often invest in them with as little as $500–1,000.

Daily editor Teeka Tiwari calls them a game-changer for ordinary investors…

I’ve made millions investing in private companies.

The last mega wave of IPOs came during 1995–1999. We saw companies like Amazon, eBay, and Nvidia go public. Today, they’re some of the biggest names in the world.

But I predict the next wave will be even bigger…

Teeka believes the COVID-19 outbreak will create the next big names.

These will be innovators who provide products and services that’ll help us adapt to social distancing and working and learning remotely.

In the next few weeks, we could see some of the top private U.S. tech firms go public.

Names like data company Palantir… software firm Snowflake… and delivery companies DoorDash and Postmates.

Combined, these private companies have a valuation of over $50 billion. If that holds, 2020 would rival the IPO tech boom of the 1990s.

For massive gains, it’s essential to have an allocation to the private markets.

Unfortunately, it’s difficult for ordinary investors to find these types of private deals on their own. And it takes real research to separate the good from the bad.

But Teeka has put together a presentation to show you how anyone can get started with a small allocation of 75 cents per share.

You can watch it right here.

If you want to get your feet wet in the private equity market, consider researching deals offered on websites like Wefunder and StartEngine.

Now, private deals come with higher risks. So always do your homework before investing in any idea.

Regards,

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Grant Wasylik
Analyst, Palm Beach Daily

P.S. To find the best private deals, you need to be in the know. And one billionaire connect in Teeka’s Rolodex has been part of 10 deals that have made some of the largest profits ever logged in stock market history.

And finally, he’s selected No. 11.

Potentially as soon as September, this billionaire’s 11th deal could go public on the Nasdaq. And when it does, we believe it could mark a turning point in your financial life.

And right now, you can get shares in this company before it IPOs at 75 cents per share.


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