This past weekend, I had the best burger in New York City.
Thick, rare and juicy. A fresh slice of ripe tomato and onion. And a charbroiled bun.
It’s from a downtown dive called the Corner Bistro.
But plenty of folks disagree with me:
They say NYC’s best burger is from the Spotted Pig, or JG Melon, or Shake Shack.
The thing is, when you make a claim about something like the “best” burger, it’s tough to prove you’re actually right. It’s based on opinions.
But when you make a claim about something based on facts, it’s easy.
And today, when I reveal the most profitable investment of all time, it’s going to be very easy to see that Wall Street’s been lying to you for years…
Proof from Cambridge
I just finished reviewing a comprehensive new study about investment returns.
The study was done by a prestigious financial advisory called Cambridge Associates.
Cambridge Associates helps investors determine how to allocate their capital. Its clients include The Rockefeller Foundation, Harvard University, and the Bill and Melinda Gates Family Office.
The company has 1700 employees, and more than $4.6 trillion under advisement.
And its new study, completed just last year, proves conclusively what we've been preaching at Crowdability ever since we got started:
The most profitable asset class of all time is early-stage, private market investments.
To perform its study, Cambridge Associates tracked a multitude of investments over time…
It analyzed returns from various asset classes like stocks, bonds and private equity, and it crunched the numbers across multiple indices like The Dow Jones Industrial Average, The S&P 500, and Wilshire 5000.
I’ll link to the study at the bottom of this article so you can review the results for yourself…
But I’ll tell you one thing upfront:
The conclusions from this study might lead you to rethink your investment strategy.
The fact is, early-stage investing crushes every other asset class.
Sure, as long-time Crowdability readers already know, early-stage investing can lead to extraordinary “homeruns”:
We’ve told you about how Google’s early investors made an estimated 3,000% on their money when the company went public. That’s like turning $5,000 into $150,000 with one investment...
We’ve written about how our business partner Howard Lindzon turned every $5,000 he invested in Uber into $2 million…
And you’ve learned how an early investor in Facebook named Peter Thiel turned every $1,000 he invested into $2 million…
But forget about individual “homeruns” for a minute.
The Cambridge Study pulls back the lens so you can see the bigger picture:
Even when you look at the average returns of the asset class (returns that include the winners and the losers)….
And even when you review the average returns over long-term time periods like 20 or 30 years, the conclusion is clear:
Early-stage venture capital is the highest returning asset class by far.
8% Returns versus 55% Returns: You Decide
For years, Wall Street’s been selling you the same old story:
To provide yourself with a comfortable retirement, all you need to do is work hard, save your money, and invest it in the stock market.
But what’s so great about the stock market?
Over the last 20 years, with all its ups and terrifying downs, the market has returned about 8% per year.
Whether you’re looking at the Dow, the S&P 500, or the Wilshire 5000, it’s that same 8%.
But now look at the 20-year returns from the U.S. Venture Capital Early-Stage Index:
55.97% annualized returns.
Here’s how to put the difference between 8% and 55% into perspective:
At 8% per year, in ten years, a $5,000 investment would turn into $10,000.
But at 55% per year, that same $5,000 would turn into $400,000.
So forget about what Wall Street is trying to sell you…
You decide where you’d rather invest.
Despite these outsized returns, for many investors, getting involved in private equity is new, and it can be intimidating.
That’s why we recommend starting small. There’s no need to put your entire portfolio into start-ups.
In fact, for most folks, we recommend an allocation towards early-stage private equity of just 5% to 10%.
And as Wayne wrote about last week, even a small allocation like that could help you nearly double the returns of your overall portfolio.
If you’re looking for big investment gains, follow the facts:
The most profitable asset class of all time is early-stage investing.