Shark Attack: Is Your Money Safe?

By Wayne Mulligan, on Thursday, September 25, 2014

In the late 90’s, Americans became more entertained by the stock market than by major league sports.

By combining money with entertainment, CNBC’s financial shows started attracting more viewers than ratings-heavyweight ESPN.

As millions of investors tuned in to watch personalities like Jim Cramer weigh in on specific stocks, trading activity among individual investors exploded.

And as these investors discovered, blindly following the “buy” and “sell” recommendations of a TV personality doesn’t necessarily lead to strong financial performance.

Are we about to witness the same scenario with early-stage investing?

Let’s take a look and find out...

Blood in The Water

One of the most popular programs on TV today is “Shark Tank.”

More than 6.8 million people tune in each week to watch a panel of judges – “the sharks” – evaluate, rip apart, and occasionally invest in start-ups.

The judges include real estate mogul Barbara Corcoran, and Mark Cuban, the owner of the Dallas Mavericks.

If you’ve ever watched the show, maybe you found yourself wishing that you – not just Mark and Barbara – could invest in these promising start-ups.

Well, you might just get your chance...

Swim With The Sharks

Barbara Corcoran is taking a page from Jim Cramer’s playbook:

She’s allowing viewers to get into deals she’s backing.

She recently launched a “syndicate” on AngelList, an equity crowdfunding platform.

Basically, backers like you will have the ability to invest as little as $1,000 into each of Barbara’s deals. In exchange, she’ll take 20% of any profits.

Jim Cramer 2.0?

To be clear, Barbara Corcoran’s on-screen action will likely be more subdued than Jim Cramer’s...

We’ll probably never see her pacing around the room, sleeves rolled up to her elbows as she hollers about start-ups at the top of her lungs.

And the deals that appear in Barbara’s syndicate aren’t the deals that appear on Shark Tank –

At least, not yet they’re not.

But that might change when Title III of the JOBS Act passes… that’s the part that lets ALL citizens invest in start-ups, regardless of their net worth of income.

And that’s what has us concerned.

Given the audience of millions that Shark Tank reaches every week...

The allure of huge profits from early-stage deals...

And the general lack of education available on this topic...

It’s easy to see how this could play out badly.

Following a personality like Cramer into publicly-traded stocks is off-putting enough...

Following someone into risky and illiquid start-ups is downright scary.

Give a Man a Fish...

I believe in the expression, “Give a man a fish, feed him for a day. Teach a man to fish, feed him for a lifetime.”

In fact, I spent the better part of the last decade following that creed.

At my last business, we’d recruit top traders and hedge fund managers from around the world and fly them into our offices. Then we’d spend hundreds of hours with these professionals, gradually teasing out their wisdom and investment process.

After that, we’d translate their wisdom into practical, easy-to-digest education for individual investors.

Over the years, we taught more than a quarter of a million investors how to profit from the market.

Watching our videos probably wasn’t as entertaining as watching Cramer –

But, on the bright side, our students actually made money.

Arm Yourself

When Title III passes and equity crowdfunding goes mainstream, I imagine we’ll start to see more start-up “entertainers” like Barbara Corcoran emerge.

Some might be helpful, others won’t.

But before you tune into them, take the time to educate yourself.

If you’re armed with knowledge and a plan, early-stage investing can provide you with remarkable financial returns – which, in my opinion, is much more fun than watching television.

Happy Investing.

Best Regards,
Wayne Mulligan
Wayne Mulligan


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Tags: Education Angellist Crowdfunding Education Shark Tank

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