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Are You Investing Like a Schmuck?

Written by Alex Koyfman
Posted August 9, 2022

Dear Reader,

Years ago, one of my mentors asked me a question that still sticks with me as if it had been posed yesterday.

"Are you still investing like a schmuck?" he said to me, after I'd spent a few solid minutes trying to pitch him a hot new tech stock I'd read about in Fortune magazine.

Now, anybody who knows me personally is aware that I'm thin-skinned, easily offended, and quick to anger, but in this case, more than anything, I was curious as to what the hell he was talking about.

"Why?" I managed push out after a prolonged shrug.

"If you're investing retail," he said with a tired shake of his head, "then you're investing like a schmuck."

My confusion only grew, as I'd known this man for years and had never received such a sweeping rejection of an idea.

He'd opined on plenty of stocks in the past, giving me both micro- and macro-economic assessments in his characteristically laconic speaking manner... But this time, he wanted nothing to do with it.

I opened my mouth again to ask a question, but hesitated, which prompted another follow-up from him.

There's the Smart Money... And There's Everyone Else

"You know how guys like me get rich, right? We don't buy with the retail investors. We sell to them." He paused. "If you're looking for stocks trading on the Nasdaq, you're already a loser, bud. The time to buy wasn't yesterday or the day before. It was last year or the year before that, when they were doing their series A's and B's. Wanna to make the big bucks? Wanna get rich? Invest when only few can. After the IPO, it's flies on shit. Is that who you want to be? A fly? Is shit what you want to be buying?"

I didn't realize it just then, as I was carefully considering whether to stab him with a butter knife or gouge his eye out with a spoon, but what was really happening here was that I was being initiated into the next level of my investing career.

What this man was telling me, albeit coated in an immodest layer of casual contempt, was a rule that I've lived by ever since: When it comes to investing, you don't want to be competing with, and standing alongside the masses.

That's not how the smart money does it. That's not how the limo-riding, jet-setting investors live their lives. Sure, the richest people in the world own millions of shares of publicly traded companies, but for the most part, they acquired their shares for pennies, even fractions of pennies on the dollar, when those stocks were still private.

We're talking about founders, venture capitalists, and well-connected, high-net-worth investors like Reid Hoffman or Peter Thiel, who flipped five- and six-figure investments into multiple billions when they bet on Facebook in two early-stage raises.

We're talking about anybody who took an early shot on Google back when only friends and family members were allowed a piece of the pie.

Want Examples? Open up a Magazine. Turn on Your TV...

Those are the people who truly "invest" — in the sense that they give these newborn companies capital infusions for the purpose of growth and development — and then sit back, wait for the IPO, and watch their fortunes explode by hundreds of thousands of percent.

Now, here's the problem, and it's a big one... Unless you're already rich and connected, you're just not going to get into any of these early-stage opportunities.

They're exclusive for a reason, and 99.9% of people who want a piece of them will most likely never even hear about these financings, much less be offered a spot on the list.

There is, however, a workaround for the everyday man.

 

In the U.S., we're used to hearing about companies going public at multibillion-dollar valuations. That's a common feature of stocks that list on the NYSE and Nasdaq, but that's not always the case.

There are exchanges in North America that host hundreds of companies that are valued at less than 1/100th of their Nasdaq and NYSE counterparts.

These companies are just as public and just as accessible to investors through online brokerage platforms, but instead of being famous brands with thousands of people on the payroll and billions of dollars in revenue, they're just starting out, often with only a handful of dedicated employees and products still in the development stage.

Everyman's Venture Capitalism

The reason why certain companies choose to go public early are numerous, but in the end, the result is the same — they give retail investors the opportunity to play venture capitalist.

Now, as any VC will tell you, with heightened opportunity there comes heightened risk... but with that risk also comes heightened potential reward.

Just imagine if Tesla (NASDAQ: TSLA) or Amazon (NASDAQ: AMZN) had gone public at a valuation of $10 million or $20 million instead of 1,000 times that much,

Just imagine if you'd taken a $5,000 swing on either of those companies when their shares were priced at a few hundredths of a penny.

Never mind imagining — I'll tell you what the results would be. A $5,000 investment in Tesla as a $20 million firm would be worth $250 million today.

The same bet on Amazon would have yielded $350 million at today's share price.

That's not college tuition or mortgage payoff cash... That's generational wealth. That's "taking your own personal helicopter to your house in the Hamptons" money.

That's exactly the sort of money that the big players on Wall Street make every single year by taking calculated risks on little-known early-stage companies.

No Risk... No Reward

And yes, you also have the opportunity to do the same thing. You just don't know about it, because nobody writes about tiny, thinly traded stocks in Forbes or The Wall Street Journal.

I will say again that the risk levels here are higher than most can tolerate. Enough to keep people awake at night, in fact. But the potential rewards are life-altering.

I've been a specialist in this class of investment for years now, and the thought of going back to buying dips in Nasdaq or NYSE stocks today is what gives me stress — not the risk I accept by taking the long shots.

My readers have been benefiting from my insights and research for over a decade, and today I'm inviting you to do the same.

If this little article piqued your interest at all, I invite you to check out this video presentation to get the whole story behind the most prospective class of stock available to you on any market, anywhere.

Access is free and instant. No credit cards or email addresses required. All you need is an open mind and the desire to profit.

Enter here.

Fortune favors the bold,

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Alex Koyfman

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His flagship service, Microcap Insider, provides market-beating insights into some of the fastest moving, highest profit-potential companies available for public trading on the U.S. and Canadian exchanges. With more than 5 years of track record to back it up, Microcap Insider is the choice for the growth-minded investor. Alex contributes his thoughts and insights regularly to Wealth Daily. To learn more about Alex, click here.

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