I made my first big haul in the early 1990s… buying beaten-down junk bonds. And in the mid-1990s, I started making money hand-over-fist in technology stocks.
I was making a fortune. But by late 1998, I’d lost it all.
Back then, I had foreseen the 1997 Asian Financial Crisis would be much worse than people realized, so I had bet on the market going lower. At first, I was 100% correct. I was making a fortune.
But then, the Federal Reserve cut interest rates and the market started going against me. Still, I kept making bigger and riskier bets. I lost all perspective and was investing for my ego, not my bank account.
You see, I made a terrible mistake… Instead of taking small bets on high-risk/high-reward ideas, I was taking massive stakes.
Within three weeks, I lost everything I’d made and more. I went from wealthy to poor in less than a month. And ultimately, I was compelled to file for personal bankruptcy.
It was a stunning reversal. Here I was… the golden boy who finally got his comeuppance.
I learned many lessons about position-sizing, risk management, and diversification.
But one of the biggest lessons I learned was this: You can’t build your portfolio solely with high-risk assets.
The Wealth-Building Equation
What I realized about generating wealth is you want to do it in a way that doesn’t stress you out. If you’re staying up late at night worrying about your investments… or snapping at your spouse over money… then you’re doing it wrong.
That’s why the first step in my wealth-building equation is to build a portfolio of safe, conservative, income-producing assets.
These can be blue-chip, dividend-paying stocks… rental real estate… structured income notes… or highly rated bonds. They’ll provide multiple streams of income and help you sleep well at night.
But here’s the thing…
You see, most people stay stuck in this first step. And then they ask me, “Big T, how can I move to a different wealth bracket with these safe assets?”
Look, safe assets will provide you with decent returns. And they generate nice streams of income. But they won’t move the needle on your net worth.
So you must add a second piece to the equation. And it’s something I call “asymmetric risk investing.”
In this strategy, you take a small amount from your safe income… and put it into investments with the potential for outlandish returns.
I mean returns like 1,000%… 10,000%… 20,000%… even 100,000%.
I suggest you put no more than 2–5% of your liquid net worth into asymmetric investments. And keep your position-sizes small and uniform.
For example, instead of putting $10,000 into one asymmetric idea… you’d put $1,000 each into 10 of them.
Here’s the advantage of this strategy…
Even if a position doesn’t work out in your favor, it doesn’t negatively impact your net worth. And even if you lose on a string of them, they won’t put you in the poorhouse.
But if you hit on a couple of them, it could exceed the value of all your safe investments combined. That has happened to me more than once – and it’s an amazing feeling.
The reason I’m telling you about asymmetric investments is that until recently, I had discovered only one market with the potential to turn a handful of small $500 investments into $1 million or more: cryptocurrencies.
For instance, in February 2017, I recommended a small crypto to subscribers of my Palm Beach Confidential service.
We got in at 13 cents and it hit a high of $198. That’s a return of 152,208% – enough to turn every $500 into more than $760,000 and every $1,000 into more than $1.5 million.
But since then, a new market has emerged where we’re seeing crypto-like gains.
It’s in a subsector of the IPO market. An IPO – or initial public offering – is when a private company lists its shares on a public exchange.
You’d have to be living under a rock to not know that 2020 has been the year of IPOs. In fact, as early as January, I predicted that we’d see a mega wave of IPOs this year.
In the second half of 2020, we’ve seen 241 IPOs so far. It’s the fastest start to the second half of the year since 2007, according to financial data provider Refinitiv.
And since March, we’ve seen companies like IT service company BigCommerce Holdings, financial tech company nCino, and oncology-focused tech company ADC Therapeutics make 201%, 195%, and 56%, respectively, on IPO day.
But while these returns are nice… the biggest paydays aren’t in the public IPO market. They’re in the private pre-IPO market.
A pre-IPO is when you buy shares in a company before it goes public.
If you tally all the companies that had IPOs this year, the difference between buying at the IPO price and the pre-IPO price is staggering. On average, gains made on IPO day are 36%. Sure, that’s nice.
But for pre-IPO investors, those same one-day gains are 22,946%. That’s the difference between a luxury vacation and living a life of luxury.
The outsized returns in the pre-IPO market certainly come under the umbrella of “asymmetric investments.” You don’t need too many gains of that magnitude to dramatically move the needle on your net worth.
That’s why my team and I have been searching far and wide for the best pre-IPO deals in the country. And we’ve found an idea I believe could lead to explosive crypto-like gains.
This pre-IPO deal is in one of the hottest sectors in the U.S. capital markets – biotechnology. Forbes calls it “the most profitable sector” in the country.
So far, nearly half the IPOs this year are in biotech. And a small percentage of them will receive a certain designation that makes them much more profitable – historically as much as 24x more profitable.
Tonight at 8 p.m. ET, I’ll reveal all the details about this pre-IPO deal.
I’ll show you why opportunities like this one are no longer just for the “One Percent.” Even if you’re a small investor, you can still get in. In fact, I’ll show you how everyday people across America are getting rich from these asymmetric investments.
So come join me at 8 p.m. tonight. And I’ll show you how this pre-IPO deal has the potential to turn a small grubstake into life-changing gains.
Let the Game Come to You!
Editor, Palm Beach Daily