Corporate earnings are at record highs...
Unemployment rates are at record lows...
And our administration recently passed a sweeping tax reform.
Theoretically, things couldn’t be better — but the stock market is floundering.
Since January 1st, the S&P and the Nasdaq are flat…
And as of today, the Dow is down for the year.
What’s going on here? Why is there such a disconnect between all this good news and the stock market’s dismal performance?
Well, to put it simply, the stock market is dead.
Today, I’ll explain the reasons for this…
Even more importantly, I’ll show you what you can do about it.
R.I.P - “The Dow” (1896 – 2013)
The chart you see below is the primary reason Matt and I decided to launch Crowdability back in 2013...
You see, this chart shows some of the biggest tech IPOs of the past 40 years.
The important thing to notice is how, over time, the colors change from grey to orange …
You see, the grey areas represent the profits earned by public market investors — in other words, people who invested on or after the company’s IPO.
And the orange areas represent the profits earned by private investors. In other words, the people who got in before the company went public.
As you can see, there’s been a fundamental shift in how wealth is being created.
For example, after Apple conducted its IPO in 1980, nearly 100% of the profits went to stock market investors.
And it’s the same story for the other big tech companies of that era:
For more than 20 years, the lion’s share of the profits went to public market investors.
But in 2004, things began to change...
Pre-IPO Profits
You see, 2004 marked a major shift in how investors earned their profits…
Starting with the public offering of Google — and gathering steam with each subsequent IPO — more and more of the profits went to private market investors.
As you can see from the orange lines in the chart, by the time Twitter went public in 2013, nearly 100% of the gains went to those who invested in Twitter before it IPO’d.
What’s going on here?
Why are pre-IPO investors capturing all the profits?
The Two Trends Killing Stocks
Long-time Crowdability readers might already be familiar with the two major trends taking place here...
These two trends are making it less and less profitable to invest in the stock market.
Trend #1: Staying Private Longer – In the year 2000, the average amount of time between a company being founded and going IPO was 6 years.
Today, that number is closer to 10 years.
Those four extra years allow a company to build its business — and allow it to increase its value dramatically.
Privately-held Uber, for example, is nine-years-old and is already worth an estimated $70 billion.
In markets of old, Uber would have gone public years ago, but in today’s market, it has no plans to go public anytime soon.
Trend #2: Raising More Money in the Private Markets – These companies can stay private longer because instead of tapping public markets for capital, companies now have access to massive pools of private capital.
From large private hedge funds like Tiger Global to global mutual fund companies like Fidelity, some of world’s biggest investors are pulling back on their public market investing in favor of private market investing.
And these two major trends contribute to a clear conclusion:
More of a company’s value is being created when it’s still private.
For example, if you look back at private companies in the year 2000, you’ll find that just 10 companies had valuations above $1 billion.
Today, there are 237 of them.
Your Turn to Collect Pre-IPO Profits
Here’s the bottom line:
The stock market can no longer provide you with the type of financial growth you’ve become accustomed to:
By the time a company goes public, private investors have already sucked out all the big gains.
Historically, this would have spelled disaster for individual investors like you — that’s because for the past 85 years, only wealthy individuals and institutions were granted access to the private markets.
But because of a new set of laws known as The JOBS Act, now you can invest in companies while they’re still private — before they IPO…
And now you can capture those big gains, too.
Remember, at Crowdability, we’ve made it our mission to help you find and profit from the best pre-IPO investment opportunities.
In fact, each Monday we send out a special newsletter where we highlight some of the best pre-IPO offerings of the week.
You can wait for that email each week, or simply visit our Deals page and use some of our powerful filtering tools to find the perfect pre-IPO deal for you.
Happy investing.
Best Regards,
Founder
Crowdability.com
