| February 23, 2014 | | | | | | | |  | | | | Only 55 Investors Allowed... | | | - After a month of mental preparation we present you with a specific private-equity crowdfunding investment opportunity (if it's still open)!
- Then, our five investment gurus' pitch their hottest five ideas to you...
- Plus, Wayne Mulligan on investing like America' wealthiest people...
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| | |  Peter Coyne, checking in from the 143 Northeast Regional… We're typing to you from a train headed back to 'Charm City'. We're excited too, because for the past month we've been writing to you about the massive profit potential of private equity crowdfunding. These are investments that have been illegal for everyday investors like you and me to access for 80 years. Until now. Today, we have a very exclusive opportunity to finally share with you. That is, if it's even still open. Our good friend and colleague laid out the specifications for readers in a special report. But he decided to keep it under wraps for only our highest-end paid subscribers. However, we called him on your behalf and asked him if he would share it with you. After all, we've been writing about this topic in the Sunday DR now for weeks! The answer I got was both good and bad. The good news is he said yes to sharing the crowdfunding opportunity with you... The bad news is that there were only 55 spots in total open for this amazing opportunity. For all I know, the spots could be all closed by the time you check it out. So, I encourage you to see our colleagues report: right here. Again, if it's already closed out, we apologize. If it's still open… you should think hard about passing up the opportunity -- investments like this have returned an out-of-this-world 200,000% in the past. Simply click here for details… first come, first served. After that, you'll find our top-five investment gurus' top-picks from this week below. Please check each of them out. Then, for the unconvinced, Wayne Mulligan gets back to basics in today's essay. He explains why private equity crowdfunding holds the key to investing like America's wealthiest. Read on... | Five Investment Reviews You Won't Want To Miss **************************************** |
 TAX FREE BOX 8 DIVIDENDS
- You're probably paying too much in 2013 Taxes...
- Unknown Supreme Court ruling protects tax-free income...
- Shocking interview tells all... |
 BIOTECH GURU DOES SOMETHING UNHEARD OF…
- Had an average annual gain of 100% on 26 closed positions.
- "Yes, I made 132%... I'm loving this... I've learned so much!"
- Next "strike" could happen next thursday... |
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| | | | Invest Like America's Wealthiest People | | | | by Wayne Mulligan |
 What do 8 of the 10 wealthiest people in the U.S. have in common?
Aside from being able to fly in private jets, the common thread is that each of them has made their fortune thanks to a start-up.
Let me explain…
From tech titans like Bill Gates and Larry Ellison (founders of Microsoft and Oracle, respectively), to retail magnates like the Walton family (Wal-Mart), it's the equity in their businesses that has created such vast wealth.
And while it's hard to picture these colossal businesses as the "start-ups" they once were, the fact is, they had humble beginnings — in many cases, just two or three people in a room with an idea.
But you don't have to be the next Gates or Ellison in order to create wealth from start-ups…
Investors known as venture capitalists (or "VCs" for short) — like John Doerr from Kleiner Perkins, or Michael Moritz from Sequoia Capital, to name just two — have become billionaires by backing small companies.
And thanks to a revolutionary new law, everyday investors like you can invest in the same deals as these VCs.
As one study recently showed, you could potentially triple your money in the next 5 years by creating your own "personal venture capital fund." Let me explain…
Before we show you how to create your personal venture fund, it's important to understand how a traditional venture fund works.
| You can potentially triple your money in the next 5 years by creating your own "personal venture capital fund." | Venture capitalists raise money from investors — usually large pension funds, family offices and other large institutions. The VCs will then spend 3 to 5 years investing that capital into a portfolio of early-stage companies. They hope to start seeing money flow back to them in 5 to 7 years.
Amazingly, they know and fully expect that the majority of their investments will go to zero, or break even at best. They understand that only a small fraction of their investments — say, 2 or 3 out of every 10 — will generate most of their profits.
This is important. It means that even the very best professional investors are wrong 70% to 80% of the time — and they still make a fortune!
The reason is simple: a successful investment can result in massive gains. For instance, Google's earliest investors earned 3,000% on their investment in only 5 years.
In other words: those investors could have written $10 million checks into 10 different companies, had 9 of those investments go to zero (losing $90 million!) — and still they would have earned a $200 million profit. And that's with only one winner.
Obviously, investors seek more than 1 winner out of 10, but it illustrates two important facts about early-stage investing:
- You need to be prepared to be wrong more often than not.
- Given the likelihood of being wrong, you need to diversify!
This brings me to a very interesting study I came across.
The Kauffman Foundation — a not-for-profit organization dedicated to studying and fostering entrepreneurship — publicly released a database of historical data they had gathered. The study captured more than a decade of early-stage investing activity.
| | | | | | |
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Click here now. | | | | | | | | The study I'm referring to, which I'll link to below, took the Kauffman data and ran some statistical tests on it. The goal was to determine the number of investments needed in order for an angel investor to double or triple their money.
In brief, the study concluded that if an angel were to invest in at least 20 companies, there would be a 98% chance of at least breaking even.
But if that investor backed 75 companies, there would be a 98% chance of at least doubling their money.
And if they made 500 investments, there would be a 96% chance of tripling their money.
Those are the statistics you need to keep in mind as you create your own portfolio of early-stage investments — your own personal "venture fund." Which you can now do thanks to the JOBS Act — a law passed by the Obama administration that allows individual investors to fund private companies online. This type of investing is called Equity Crowdfunding.
| If that investor backed 75 companies, there would be a 98% chance of at least doubling their money. | You're no doubt an expert on the topic by now… especially after the past month. After all, each Sunday we've been exploring this new investment class.
To be clear, deciding on 75 or 500 investments is no easy task; it's hard enough to choose one! But keep in mind this is a portfolio you'll be building, and it will be constructed over the course of several years — similar to a traditional venture fund.
So when you, as an individual investor, decide to enter the world of equity crowdfunding, you should approach it like a venture capitalist — and be thinking along similar time horizons.
Two other things to keep in mind before you run off to start your fund…
- These types of investments are highly risky and speculative. Therefore, you should allocate only a small portion of your investable capital towards them.
- In most circumstance, the shares you buy in early-stage companies are highly "illiquid" — meaning, there is no market for them, and you can't convert those shares to cash. You need to have your eyes open to the fact that you won't see that money again unless the company is acquired by a larger company, or goes public on the stock market.
Now that we've written about some of the risks and potential rewards, we'll wrap up by saying that we're big supporters of early-stage investing and equity crowdfunding. Before the JOBS Act, it would have been financially impossible for everyday investors to create a portfolio of 75 angel investments.
Now that you can invest as little as a few hundred dollars into a start-up and participate in the upside, a "personal venture fund" has become a reality.
Regards, Wayne Mulligan
for The Daily Reckoning P.S. If you haven't already, check out our explainer video. It takes less than three minutes to watch: | | | | | | |  Wayne Mulligan is a Financial Media entrepreneur and executive. Most recently he was CEO of The Institute for Individual Investors (IFII), a financial education & publishing company. At IFII, he helped grow sales to $10 million and spearheaded the company's sale to market-leader Agora Publishing in 2011. | | | | | | | BE SURE TO ADD dr@dailyreckoning.com to your address book.
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