The #1 way to get rich … the market perspective to adopt to find them … a new, free research service
What’s the best way to become obscenely wealthy?
I’m not talking about enough money to buy a new car, or even, say, a mansion.
I’m talking dynastic wealth. The kind that changes not only your life, but that of your kids, and their kids, and their kids…
If you’re thinking something along the lines of “investing in a company like Amazon right at its IPO,” that’s not quite it.
Sure, you could make boatloads of money doing that. But the best way to amass extraordinary wealth is by being the person behind that successful business. Think Bezos, Musk, Gates, Buffett, Ellison, Zuckerberg, Page, Koch…
The richest individuals in the world aren’t movie stars, athletes, or world-famous musicians – they’re business owners.
Take the rapper, Jay-Z. He’s one of the most famous, successful artists of all time. But it wasn’t until he created a business empire including a music streaming service, liquor, art, real estate, and stakes in other companies, that his net worth topped $1 billion.
Bottom-line, when it comes to generating life-changing walk-away money, being an entrepreneur trumps all.
“Thanks, Captain Obvious. I’m aware. But I don’t have the idea, time, or finances to launch the next billion-dollar company. So, what now?”
Fair enough. We can’t all be the person who starts the next Tesla.
But it turns out, the second-best way to become obscenely wealthy is by investing alongside the founder of the next Tesla when it’s a tiny, private company.
And thanks to recent legislative changes, this is now something all of us can do.
***The extraordinary wealth generation of private investing
This past summer, the Digest featured a series of interviews with private investor, Cody Shirk.
Cody is a 35-year-old investor who comes from humble beginnings. Yet, he now runs a private investing group, having done deals all over the world.
He also has a growing list of 1,000%+ venture capital winners under his belt – and keep in mind, they didn’t require decades to develop. In fact, one of Cody’s most recent 35X-winners took less than one year.
We’re thrilled to announce that Cody has officially joined our InvestorPlace team of expert analysts. He’s writing a free publication called the Venture Capital Digest.
In it, Cody shares tips and tricks to private investing… trends he’s tracking… even deals that catch his eye. Cody’s Digest is a fantastic way to keep a finger on the pulse of the venture capital world.
Plus, when you sign up for Venture Capital Digest, you’ll get Cody’s free report “Top 3 Private Company Investments for 2022.” As the names implies, this research piece details three specific private deal recommendations that could go on to become huge, publicly-traded companies…putting a massive wad of cash in your pocket.
Both the service and this special report are free. Just click here to sign up.
***Today, let’s jumpstart your private investing education
We’ll do this by looking at venture capital opportunities from Cody’s perspective. It’s a unique lens that helps him identify potential multi-baggers.
The example Cody is about to highlight focuses on the growing trend of psychedelic therapies.
Now, if your reaction to that is negative, Cody would be thrilled. That’s because, as you’re about to read, it’s evidence that the biggest gains are still ahead.
From Cody:
I’ve personally invested in more than 20 private companies, founded two companies of my own, and invested in two separate venture capital funds – all focused on developing and bringing psychedelic therapies to the broader public.
To say that I believe psychedelic medicines will be big in the future is an understatement. This market is gearing up to be like the cannabis market.
I’ve essentially taken my liquid capital and allocated it throughout the psychedelic startup environment.
Better yet, I’ve already had several investments exit, which has resulted in enormous profits – one of which netted me a 35X return and several others that are in the 5X to 10X range.
I’ve taken the majority of these profits and reinvested them back into the psychedelics ecosystem.
Right now, my strategy looks brilliant. Companies that I invested in that had valuations in the tens of millions of dollars are now trading on the public stock exchanges with market caps of over $1 billion.
But several years ago, this strategy didn’t seem so brilliant.
When I first started writing about investing in psychedelics in 2019, shortly after I started investing in the space, I received dozens of emails telling me that I was insane – and that investing in “illegal drugs” was “one of the dumbest investments one could make.”
Of course, I knew the other side of the story.
***How shifting public opinion creates massive investment opportunities
Cody explains how there’s a growing body of science suggesting “illegal drugs” have incredible applications for many mental health issues.
He points out that over just the past few years, doctors have used them to successfully treat – and, in some cases, cure – anxiety, depression, and addiction in thousands of people.
Back to Cody:
Now consider that over 1 billion people on Earth suffer from mental illness during some point in their lives. That, to me, makes this investment opportunity unbelievably obvious.
But that’s what every trend looks like in the beginning: “insane,” “dumb,” “unrealistic”… and those are some of the nicer words people use.
***What we’re seeing with psychedelics follows a familiar progression
Opinion goes from confusion or outright outrage, to a budding awareness, to broader societal acceptance, to mainstream normality.
Take the early 1990s when talk-show hosts and TV reporters tried to explain the internet.
They had no clue how to describe it, and zero awareness of how important it would be in the future.
Same goes for smartphones, cryptocurrencies, artificial intelligence, automated vehicles, and so on.
Or marijuana – compare public opinion on marijuana in the 1950s to that of today. The difference is profound.
Back to Cody:
It’s human nature to resist change… ignore disrupting technologies… and miss out on huge profit opportunities.
As a private investor, you must embrace change. You have to be on the lookout for new trends that will transform the world.
The difficult part is having the conviction to follow through on these investments while everyone around you is telling you that you’re nuts.
But that’s how many successful people become wealthy. They pursue out-of-the-box opportunities…
As a private investor, if you can spot trends early, you must have the guts to take action.
When game-changing trends are getting started, there are usually just a handful of companies targeting that innovation. That means that you only have to invest in a handful of them to expose yourself to incredible upside potential.
***A quick preview of that “incredible upside potential”
Earlier, Cody noted that one of his recent investments made him a 35X return. That turns $10K into $350,000.
But let’s call that return unusual. If we take “average” venture capital returns and compare them to “average” stock market returns, what do we find?
Cody recently ran the numbers. Here are the inputs…
- A starting portfolio of just $5,000
- The money compounds at the S&P’s 100-year average annual return of about 10%
- You add $1,200 of new investment capital every year ($100 per month)
- Your investment time frame is 20 years
Under these conditions, your initial $5K will be worth $102,249 in 20 years.
Great return!
But what about returns when applying venture capital-style numbers?
In this case, all we’ll change to our inputs is the average annual return. According to the National Bureau of Economic Research, annual venture capital returns clock in at 14.8%.
After crunching the numbers, that $5K initial investment balloons to $199,290 after 20 years.
Basically, the venture capital approach doubled the return from stocks.
Best of all, being a venture capital investor isn’t harder than being a stock investor.
Back to Cody on this point:
As long as you stay disciplined, investing in private companies is no more work than investing in public companies. In fact, I’d argue that it might be a little less work.
With private investments, all you have to do is your upfront research. Once you make your investment, you just wait for a liquidity event. You don’t have to keep checking the stock price and stress yourself out over daily fluctuations.
So, if it’s the same amount of work to invest in private companies as it is to invest in public ones — and private companies offer a superior return — then it’s obvious what investment class you should be investing in for your kids…
Or yourself!
We’re running long, so we’ll wrap up here. But I strongly encourage you to sign up for Cody’s free newsletter – especially if you’re new to the private investing world. It’s a great way to learn about this exciting corner of the market without any strings attached.
We look forward to bringing you more from Cody here in the Digest.
Have a good evening,
Jeff Remsburg
