Imagine you’re getting ready for the “who’s who” event of the year.
You want every last thing to be perfect: your clothes, your shoeshine, even the grand entrance you make.
So you buy a new suit...
Get a haircut and a shave...
You even hire a chauffeured Bentley.
The event finally arrives. You’re beaming as you step out of the car and strut towards the venue’s entrance... but then suddenly, you realize something is amiss.
The lights are off. The door is locked. Nobody’s there to greet you.
You showed up too late. The event was last night!
If this were just a social function, it would be an inconvenience...
But when it happens with investing, it can cost you thousands – possibly millions.
Today, I’ll tell you about some friends who were late to the biggest investment “parties” of our lifetime – then I’ll show you how to avoid the same mistake with the party that’s taking shape right now.
“Wayne, You’re Missing Out!”
Let me start by telling you about my friend Alex (not his real name).
It was late 1999 and Alex had been aggressively investing in tech stocks.
He felt like he couldn’t lose. And everyone seemed to agree:
CNBC commentators. Newsletter publishers. Even financial advisors. They all believed the NASDAQ would keep going up.
“Wayne,” said Alex, “you’re missing out! This is the easiest money I’ve ever made!”
But I was busy building my first start-up. I didn’t have time to focus on stocks.
I should consider myself lucky.
The dot-com “boom” ultimately went “bust.” Alex’s profits – and his savings – were wiped out just months after our conversation.
Alex’s experience taught me a lesson – but others didn’t get the same memo...
The year was 2008 and my buddy Eric (again, not his real name) was about to buy a new home — a $1 million condo in South Florida.
It was definitely out of his price range, but the broker was happy to underwrite the mortgage. And besides, Eric thought he could sell it for a profit if he ever needed to.
Well, you can probably guess how this situation turned out.
Eric is upside down on his mortgage, and he struggles each month to make ends meet.
Never Be Late Again
The fatal mistake my friends made (and they were hardly alone) is that they showed up late to the party.
Eric and Alex only felt comfortable investing after everyone was doing it.
But by the time everyone is involved, the real profits have already been made – or, worse, a crash is upon us.
Meanwhile, the folks who were truly early – to tech stocks, and to real estate – made out just fine. They came out ahead even after their respective crashes.
The fact is, to make real money, you need to be early to the party.
And if you’re a long-time Crowdability reader, you already know where the next big soirée is taking place...
Be Early And Be Prepared
The next “party” will be in early-stage private equity – i.e., investing in start-ups.
To be fair, for some folks, this party’s been raging for decades:
Venture capitalists and professional angel investors – the folks who invest in start-ups at their earliest stages – have been active in this space for over 50 years.
But most of the investing public – perhaps including you – have been legally prohibited to participate.
But all that will change very soon.
Once the SEC enacts the final piece of The JOBS Act – the 2012 bill passed by Congress to help more businesses get started – then everyone, regardless of net worth or income, will be able to invest in start-ups.
But that doesn’t mean everyone will make money.
You obviously need to make sure you’re early to the party...
But even more importantly, you need to be prepared. You’ll need a strategy for investing in this asset class. Otherwise, no matter how early you are, you could still lose your shirt.
Which is why we’re trying to get you ready...
We publish reports, white papers, and essays like this one, and in Friday’s newsletter, we link to other peoples’ useful information.
But we’d like to do more. What else can we do to help you prepare for this unprecedented change in securities laws?
Click the link below and leave us a comment, or send us an email at firstname.lastname@example.org.