Editor’s Note: We’re doing something a little different today…
We’re interrupting our traditionally conservative investment ideas to bring you a unique concept from our good friend Andy Snyder, founder of Manward Press, an Oxford Club Pillar One Advisor.
After all, depending on your risk tolerance and time horizon, sometimes it pays to get a bit speculative.
You see, it used to take big money and strong connections to get in on the hottest, most innovative companies before they went public.
Not anymore. Andy is here to tell us about an exciting new way everyday investors can get in on some of the biggest pre-IPO opportunities… courtesy of the free market.
Check it out below.
Keep in mind, Wealthy Retirement‘s publisher, The Oxford Club, advocates that you allocate only 5% of your portfolio to speculative investments such as pre-IPO opportunities.
– Mable Buchanan, Managing Editor
It’s not all that often I get giddy about a new investing idea.
A lot of them cross my desk.
But this one has my leg shaking.
Last week, I was talking with some colleagues in the industry about the immense power of the free market to make people money.
No matter the obstacle, it always finds a way.
The latest proof is in the idea that stands at the core of the mighty capitalist mindset.
One well-known financial rag says it’s the “hottest thing on Wall Street.”
Others have said it’s the start of a financial revolution.
The headline writers at The Economist call it a “rebellion.”
As for me, I recently went on camera in the heart of New York City to say, “It’s probably the single best shot everyday Americans have to make extraordinary wealth in this market.”
That’s a bold statement… so let me explain.
The System Broke
For nearly two decades, I’ve watched as initial public offerings (IPOs) have become riskier and riskier – not just for investors but also for the companies behind them.
While IPOs were once a way for savvy investors to get into a company at the “sweet spot” of growth and reliable sales, they’ve recently become too burdensome and expensive for many startups to take advantage of.
Historically, companies would go public at the point where their growth turned hyperbolic. Needing some cash to take full advantage of their growth potential, they’d open their shares to the public and let everyday investors in on the action.
It created an ideal opportunity for investors.
You may remember when Microsoft (Nasdaq: MSFT) went public in 1986.
Back then, it was a typical IPO. Unlike many of the mega-IPOs we see today, the software firm was a tiny company when it first opened to public trading. Its first shares sold for just $21… with a market cap of just $777 million ($1.7 billion in today’s dollars).
Shares tripled in their first year!
Compare that with the Coinbase (Nasdaq: COIN) IPO… and its staggering $86 billion valuation.
It was 50 times bigger than Microsoft at its debut.
It has done just what I told my readers it would do.
Coinbase is down 30% in the month or so it’s been public.
Clearly, something is broken. The IPO system isn’t what it once was.
The problem is obvious.
After decades of one regulation piling on top of another, the IPO process has become a flat-out mess.
It can cost as much as a full year’s worth of sales just to navigate the Securities and Exchange Commission’s rules.
The banks get a cut…
The government gets a cut…
Insiders get a cut…
By the time the public gets into a fresh IPO, there’s not a whole lot left.
Folks had better buy these old-school IPOs with the intent of holding for a very long time.
As so many recent deals have shown, it will take years for a company to make back what the red-tape-laden IPO process takes out.
But there’s hope.
There’s always hope when the free markets are free to roam.
The New Alternative
My perhaps extreme take on the idea recently took me to the heart of the situation… Wall Street.
I went there to be interviewed by a prominent reporter. The subject? An incredibly powerful alternative to the IPO crisis known as SPACs.
They prove that the free market always wins.
SPAC stands for special purpose acquisition company.
It’s the word “acquisition” that matters most.
Take a gold mining SPAC I told my readers about last week.
It’s what we call a “blank-check” company. Its investors (you can be one of them) gave it cash and said to go find a private gold mine to take public.
From there, the team of “headhunters” has a very clear job to do… It will seek out the very best privately owned gold mine to acquire and merge with.
And because the SPAC is already listed on the New York Stock Exchange and its shares are trading right now, the acquired gold mine will hit the public market without all the red tape.
- No huge checks cut to lawyers, regulators and big banks
- No time-consuming roadshow
- No blackout periods
- No insider-only deals
- Virtually no red tape.
It represents a huge pre-IPO opportunity for investors who own the SPAC.
The timing is great for early investors. Gold is heating up.
But don’t go searching the internet looking for the gold SPAC I wrote about. I used it only as an example. I’ve got my eye on a much better opportunity…