Mike’s note: For years, Wall Street has excluded everyday folks from trading in a “hidden,” but highly lucrative market. If you weren’t wealthy or well-connected, you had no chance.
But in today’s essay, our colleague and Palm Beach Daily editor Teeka Tiwari shows how – thanks to an overlooked rule change – anyone can get involved. And what was once a private club for millionaires is now open to everyday investors.
Teeka has much more to say on this topic beyond the scope of this essay. So, anyone who wants to learn more should join his Set For Life Summit this Wednesday. There, he’ll reveal exactly how you can access this peculiar market… and how making this one specific move can you hand you a life-changing gain.
Click here to learn more about this new opportunity…
I’m sure you’ve heard of Facebook co-founder and multibillionaire Mark Zuckerberg.
But do you know who David Choe is?
He made his riches in an early deal with Facebook. But he’s not a programmer, social media specialist, or even an investor.
He’s a graffiti artist who spent time behind bars.
Hungry for work after getting out of jail, he painted Facebook’s first office in 2005. But Facebook was trying to conserve cash at the time.
For payment, the company offered him a choice: $60,000 in cash or $60,000 worth of pre-IPO Facebook stock. Choe took the stock.
Today, it’d be worth in excess of $500 million – a massive 833,233% gain.
The key to Choe’s wealth was he got his shares at their pre-IPO valuation. Had he got the shares at the same price public investors paid on IPO day, he would’ve made just over $470,000. That’s nothing to sneeze at… But it isn’t $500 million.
That’s the difference between being in a deal pre-IPO vs. at the IPO.
An IPO – or initial public offering – is when a private company lists its shares on a public exchange. So far this year, we’ve seen $116 billion raised by private companies going public, which includes special purpose acquisition companies (SPACs) and IPOs.
And dozens more are going public this year, including Silicon Valley data analytics firm Palantir… and the payments arm of Alibaba, the Chinese version of Amazon.
With all this bullish news, it’s no wonder the IPO market is up over 60% year-to-date. Meanwhile, the S&P 500 is up less than 10% on the year.
But the truly life-changing gains – like those made by Choe – come from investing in private companies before they go public. That’s why we call it pre-IPO investing.
The problem you’d have faced with Facebook back in 2005 is, unless you knew an insider, you would’ve never been offered a pre-IPO deal on the terms Choe got.
And even if you wanted to invest, you couldn’t – the law prohibited it – unless you were already a millionaire or the company chose to invoke a special exemption for you.
But due to a change in the law, you can now legally invest in private startups. And you don’t need to be a millionaire, either.
The Hidden Market of the 1%
During my time on Wall Street, I discovered a secret…
There are really two markets: The “hidden” market, where the rich and connected make their millions… and the stock market for everyone else.
The hidden market is private equity. And it’s the playground of venture capitalists.
According to some estimates, this market has nearly $6.5 trillion in assets under management. For years, Wall Street has walled it off from you.
And for good reason: The gains it’s pocketing are truly massive – far bigger than what you get with regular stocks.
Take eBay, for example. If you invested in the company on the day it went public, you would’ve bought shares at $18. In one day, you’d have turned every $1,000 into $2,630.
But early investor Benchmark bought shares for 11 cents and turned every $1,000 into $427,270.
There are hundreds of examples…
If you invested in ride-sharing company Lyft in 2013 when it was still private, you would’ve made 87 times more money than what the IPO investors made.
Private investors in social media company Snap saw a return of 250x on IPO day. Investors that came in at the IPO price made just a 44% gain by comparison.
Friends, investing post-IPO and pre-IPO is the difference between taking a two-week luxury vacation… and going on a luxury vacation for life.
And until recently, 99% of Americans couldn’t access deals like these.
Here’s Your Way In
Thanks to new rules by the Securities and Exchange Commission (SEC), non-millionaires can now invest in these pre-IPO deals.
They’re called Regulation A+ offerings. And they’re open to the general public – not just accredited investors with a net worth of over $1 million. In some cases, you can buy into them with minimums of $500–$1,000.
I’ve personally made millions of dollars from private deals… as have many of the folks in my professional network. But if you’re not already rich or exceedingly well connected, it’s difficult to get into these deals.
It’s frustrating, because it traps investors into always paying “retail.” What I mean by that is, private investors are able to get in early and buy their shares at the equivalent of “wholesale” prices and sell them at “retail” when the company goes public.
For reasons I’ll explain next Wednesday, September 9, at 8 p.m. ET, we are moving into a golden age of pre-IPO investing. But there’s a problem… You can’t buy private startups from your brokerage account.
Your investment adviser probably won’t ever tell you about them, either, because he’s not compensated to do so.
That’s why next Wednesday, at 8 p.m., I’m holding my first-ever Set For Life Summit. During this event, I’ll show YOU how to get in on lucrative pre-IPO deals… so you could potentially follow in the footsteps of David Choe.
My team and I have found an incredible company with truly massive potential. And the best part is you can get in at pre-IPO prices.
If you want to have a shot at moving the needle on your wealth this year, then you need to be in pre-IPO deals. I haven’t seen this type of wealth potential since the 2017 crypto boom.
So come join me on September 9, at 8 p.m. ET… and I’ll give you the details on how you can discover my top pre-IPO pick for 2020.
Let the Game Come to You!
Editor, Palm Beach Daily