No, It's Not a Conspiracy. The Game Is Rigged.

Over the years, I’ve heard my share of free advice and philosophizing on the topic of investment. 

I’ve heard it compared to horse racing, by an uncle of mine who never made any money on either. 

I’ve heard it compared to craps, by another uncle who had never set foot in a casino or made any money, investing or otherwise. 

I’ve even heard it compared to the lottery, by my own father who never once played the lottery or bought a stock. 

As I’ve learned, you have to evaluate wisdom based on the source. 

A number of years back, when I was just getting started as an investor myself, I heard another opinion on investment, only this one stuck with me. 

It was at the annual boat show in Fort Lauderdale, and I was already a bit dazed, either from the sun or from the procession of espresso martinis I was being fed on the back deck of a 110-foot yacht.

“The Game Is Rigged”

The owner of the yacht wasn’t present, but the man who owned the company that had built the boat — the one who had invited me there that afternoon — was. 

He was using that particular model as a demonstration platform for prospective buyers.

Sitting there, slowly taking in the scenery and the alcohol, it was hard not to fall into a euphoric trance. 

It was hard to keep my mind on the topic of conversation I’d come there to discuss. 

Thankfully, my host, the Croatian-born shipbuilder and serial venture capitalist, was a man who liked to focus just as much as he liked to serve his guests potent cocktails. 

“Look, buddy, I know you want to believe that capitalism is the ultimate form of democracy, but I’m telling you right now…” He paused to finish his drink and gesture for a new one. “The game is rigged.”

It was a phrase that had been applied to the stock market plenty of times in the past, mostly to my annoyance. But when a guy who ran a shipyard turning out eight-figure toys for hyper-rich clients said it, the thought tended to carry more weight. 

“Just look at the owner of this boat we’re on, okay?” he said, taking another healthy sip of the heavily caffeinated martini. “Worth probably $50 million. He made his money investing, right? When do you think the last time was that he personally bought a stock on the open market?”

“I would assume he’s got a manager doing that for him now.”

“Oh, sure he does. He’s got a fund manager taking care of his whole portfolio now… But he’s a professional investor. Why would he hire a fund manager to manage his stock portfolio?”

I shrugged. “You got me.”

“Because that’s not where the real money is made, man. His stock portfolio is going to protect his fortune against inflation, maybe grow a little bit… 6% a year, 8% a year… something like that. If he’d started out like that, he’d never be able to afford the slip fees for this thing,” he tapped his glass against the stainless steel railing running behind his seat.

“The real money, the money that made this guy rich enough to buy a boat like this, is made off the open market. Next big IPO you see. All those shares flooding into the stock exchange? You want to be the guy selling those shares. That’s the definition of smart money.”

Less of a Democracy… More of a Race

I finished my drink, sweeping my gaze across the panorama one more time. 

Nothing he had said was new to me. What was new was the starkness of the reality. 

About 20 feet below our elevated sitting area, the marina walkways were crowded by tourists, with their cameras and souvenir bags and index fingers extended at the looming private boats parked all around. 

Just to get on board one, to look around and talk to the sales representatives, one had to be a financially qualified buyer. 

Compared with those jam-packed walkways, all of the boats, which ran all the way up to 250 feet, had only a handful of guests onboard each. 

While the rest gawked and pointed and took pictures, only a select few were looking to participate. Really participate. 

The same relationship existed in the world of investing, too. 

There were those who were in early, and there were the rest… the retail investors who scrambled for shares on the open market. 

It was that conversation that set me off on a mission to get inside this world. 

Investing here, when all you’d ever done was buy and sell stocks, turned out to be another universe altogether.

This Isn’t Your Father’s Stock Trading Platform

There were heaps of paperwork and restriction periods where shares could not be sold. Sometimes, when companies failed to go public or attract a buyout offer, you could even lose the entire investment. 100%. 

But the tradeoff was far, far greater than the risk. 

Owning companies before they had moved up the chain of capitalism to the point where the public — the retail investors — got to get their nibbles using their Scottrade accounts was essentially a license to print cash. 

You just had to know where to look and how to pick from what you found. 

It took years to get to this point, but using the knowledge I gained, I launched a brand-new publication — Angel Financial’s First Call — where I solved the problem plaguing most eligible investors: finding the opportunities. 

To those with the will and desire, First Call is a window into the world of the smart money, where pre-IPO and private equity investing is the main focus. 

Next week, I’m releasing my latest discovery, so today and today only, I’m opening the door for new members to join our club and participate. 

If you think you’ve got what it takes to set yourself apart from the retail crowd, click here and watch my brief video presentation.

Fortune favors the bold,

Alex Koyfman

Check us out on YouTube!

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 Energy and Capital. To learn more about Alex, click here.