This post Make A Fortune By Investing Through the “Back Door” appeared first on Daily Reckoning.
I usually prefer focus on investments most people have never heard of. I do this with a strategy I like to call “backdoor” investing.
A “backdoor” investment is a publicly traded company that capitalizes on a “big idea” or trend sweeping Silicon Valley. At any given moment, the venture world is filled with thousands of companies at work in almost every sector of business.
For instance, why invest in Tesla when you can find the tiny company supplying batteries for the
Tesla cars and invest in that?
That tiny company won’t be tiny for long. So… it’s the back door. Almost always, there is a way to:
1. Play the idea directly in the stock market
2. Buy a stock whose business will directly benefit from a growing startup or a Silicon Valley trend.
The great thing about this is it allows everyday, average investors to profit from venture capital
investment trends without having to ever touch Silicon Valley (because most of us can’t get in on those deals anyway). It’s about using public companies that are available in the stock market to place bets on the latest trends.
And there’s an added advantage here.
For years, the only people who could invest in promising new technologies and non-public companies were accredited investors. That meant they were people with more than $1 million in net worth or an income north of $200,000 per year.
In other words, people who were already successful.
Investors who weren’t accredited (didn’t have the cash in the bank to qualify) were left out. Backdoor investing solves that problem, allowing everyone to get in on these major trends without necessarily having to invest in the private markets.
And that’s not all.
Title III of the Jumpstart Our Business Startups Act (aka the JOBS Act), finally enacted in 2015, officially opened the door to equity crowdfunding by allowing non-accredited investors to invest in startups and small businesses. Finally, all investors have access to the potential lucrative …read more
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