Since the beginning of the year, the S&P 500 has been down as much as 19%, and the Nasdaq has dropped as much as 27%.
That begs the question: Where did all that money go?
Most people see market sell-offs like that and panic sell… just like we’re seeing today.
What they don’t realize is there’s another side to the trade.
Because hedge funds and big institutions aren’t stashing their profits under the mattresses…
They’re moving it into another opportunity: Private markets.
In 2021, the pace of new unicorns (a unicorn is a private company that reaches a billion-dollar valuation) increased considerably, reaching an average of two new unicorns minted per day.
Right now, companies on the unicorn board have an average value of about $3.7 trillion… That’s a $1.8 trillion boost in value in less than a year.
This growth is partly due to the private market being a different ball game than the public market.
It’s completely disconnected from publicly traded stocks… so it’s not affected by the volatility caused by inflation and geopolitical uncertainty.
That’s why I believe we’ve seen so much public market capital flow out of stocks and into the private markets.
According to Fortune, more than 80% of venture capital (VC) and private equity firms say they plan to raise capital in 2022. That’s up from 75% in 2021.
And the amount of money they’re raising is increasing. In 2021, private equity funds raised at least $733 billion globally, surpassing every previous year on record.
This year they’re forecast to raise $952 billion.
Now, with everything going on in the world, I know it’s hard to focus on ideas like private markets. People are too busy worrying about rising food and gas prices.
But I can tell you – without a shadow of a doubt – hedge funds and VCs haven’t stopped looking for opportunities.
I’m going to repeat that because it’s important…
While the bear market has caused everyday Americans to go into “survival” mode, the smartest money in the world looks at this bear market and asks, “Where’s the opportunity?”
This mindset is one of many that separates investment professionals from everyday investors. Reframing how you perceive a bear market is critical to your success as an investor.
I know that’s easy to say and hard to do. Please hear me when I say this: You will never become a successful investor without learning to make a bear market work for you instead of against you.
Why Hedge Funds Turn to Private Companies
The rush from the public markets into the private markets makes sense when you consider the following:
Unlike public companies, market swings don’t affect the share prices of private firms. In fact, the prices of the companies we recommend in our private investment newsletter have remained stable since the outbreak of the war.
The best private companies built up substantial war chests before Russia invaded Ukraine. They can use that money to buy distressed assets on the cheap. And I expect them to continue the same during this conflict.
If the market stays volatile, companies can remain private until the conditions are more favorable for a public offering. So private companies have tremendous flexibility.
Studies by research firms like Blackstone and KKR show that private companies not only outperform the S&P 500… they also have lower volatility than publicly traded companies. And they perform better during challenging times.
These are all great reasons to consider private investments when the market is weak… just like now.
But what I really like about buying into companies before they go public is it beats investing in companies after they IPO.
Take Uber, for example. It’s down 50% since the beginning of the year… and IPO-day investors are down about 50%, too. But pre-IPO investors are up 70,000%.
Or look at exercise equipment maker Peloton. At $12.87, it’s down about 50% since its $27 IPO-day price. Yet pre-IPO investors are sitting on gains of about 231%.
And then there’s language-learning software developer Duolingo. It’s down 47% from its IPO day price. But pre-IPO investors are up 329%.
As you can see, current volatility has wiped out billions of dollars’ worth of capital in these public companies. But those who bought them when they were private are still up triple and quintuple digits, despite the pullback.
That’s the beauty of pre-IPO investing.
A Breakthrough Pre-IPO for Less Than $5 a Share
In the private pre-IPO market, early investors can get into companies for pennies per share and sell them for tens of dollars.
That makes private equity investing one of the few places outside of crypto where you can make life-changing gains.
The problem with private equity is unless you’re already wealthy or exceedingly well connected, it’s nearly impossible to get into these deals.
One of the ways I’ve been so successful for my readers is by developing a network of insiders and riding their coattails.
And recently, one of my insiders reached out to me with what could be the single-biggest pre-IPO deal I’ve ever come across.
The investor behind it has built his billion-dollar fortune off 11 private deals.
His first deal took a small internet service provider from 8 cents per share to as high as $10… That’s a 12,400% return on investment.
Then there’s deal No. 3. It was a 20-year-old gold mine this venture capitalist (VC) and his team acquired for $2 million – pennies on the dollar.
By the time they were done with it… the mine was a moneymaking machine. It sold for $580 million. That’s a return of 29,000%.
Deal No. 10 was absolutely insane. It had a return on investment of 460,000%. That’s enough to turn $1,000 into $4.6 million.
When you have the chance to invest alongside a dealmaker like this guy… you’ve got to take the shot.
That brings me to what I call deal “No. 12,” but you’ll need to act soon.
80% Full, and Counting…
Remember deal No. 10 – the 460,000% gain I mentioned above?
That pre-IPO company went public on the New York Stock Exchange (NYSE). I’m talking about the Big Board. The biggest exchange in the world.
This same insider also plans to list deal No. 12 on the NYSE…
Some VCs go entire careers without finding a single pre-IPO deal that lists on the NYSE… and this venture capitalist is on track for two.
Let me be very clear: If you want in on deal No. 12 before it lists on the NYSE… It’s critical you make your move immediately.
Can I guarantee that No. 12 will see gains as high as No. 10? Of course, I can’t.
But I can tell you that this deal is already over 80% full… which means it could be closing as soon as the next few weeks.
Not getting into it could be one of your biggest missed opportunities… and I don’t want you to live with that type of regret.
For more details on this pre-IPO opportunity, click here.
Friends, the geopolitical uncertainty we’re seeing today isn’t stopping VCs and hedge funds from jumping on private opportunities like deal No. 12…
It shouldn’t stop you either.
Let the Game Come to You!