How does the average pleb invest in private businesses?

Many ways.

I’m on the road I’ll add to this later.

The biggest opportunity is partnering with one or starting one and actually running it

Also the biggest possibility of failure.

But the original principal is not liquid and if you're starting a business from scratch then it's definitely not liquid. Starting a business is great, but you still have to weigh the risk/reward. For people with full time jobs who have steady income, it can be a huge risk.

It's not true. I'm sorry but you CAN beat the S&P - and it's not even that hard. We have to stop comparing to multi billion dollar funds who are constrained to blue chips. If I only had to manage a $1 million portfolio then I can achieve annualized returns of 50% over the next 5 years - no doubt in my mind. But when $1 million becomes $10 billion then those returns diminish because it effects my investment options.

Been buying every dip the last week and so far so good. Market's will make ATHs and I have a target at 39k by 2020. So this is just a panic move to scare people out of their stock positions and into govt. bonds for the last time. btfd

my portfolio getting bodybagged outhere probably cot damit i was 5k away from 6 figs

not directed at anything but I lol'd

silly liberals, when will they ever learn?

And right there you proved I don't need to take you seriously...

To everyone else in this thread with an open mind.

Audioslave is right in a few things, but he is also drinking some strong ass koolaid.

Remember for you to have an opportunity to buy something someone has to be willing to sell. In other words for you to pick up a stock someone else needs to think it is overvalued at that price. If you have financial knowledge and can properly evaluate a stock MAYBE you can beat the sector ETF. Again professionals aren't particularly successful with this. If you are not a professional and you are picking up individual stocks you are gambling and nothing more.

The people I am telling to just say fuk it and buy a Total Market ETF and call it good are NOT professionals. I see it on Finance misc all the time. Sure as long as the market is going great I could absolutely get 50% annual returns. However, to do so I would drastically increase my risk. If I am leveraged that high and the market turns I would be DONE.

First of all, I am an investment professional specializing in equities, but I do cover a range of securities. Yes, if you work full time and don't have a strong finance background then index funds are the way to go. However, if you're willing to really put in the work and spend hundreds of hours educating and practicing then yes, I believe individuals do have the ability to beat the market. And I can achieve 50% regardless of how the market moves if I am only managing $1 million. The funds today have too many assets under management to really create impressive returns.

For the market I am preaching to it is 100% correct. They just don't have the tools.

People that can't read financial statements make a decision based off of feels and some how think they are good to go.

Even properly balancing a portfolio is hard as fuk. Maximizing Return while minimizing Co-variance over multiple assets. (IF you want to learn balancing I recommend this thread:https://forum.obnoxiousbrutes.com/showt...hp?t=174176811)

So you are a finance professional and think you can get 50% annualized returns on a million dollar portfolio regardless of how the market moves???

OKAY THEN. Seems about as legit as the all in on BITCOIN strat going on. LOL

agreed.




Audioslave - if you are as good as you claim to be, put your money where your mouth is. Set up an Investopedia simulation account and turn your $100,000 starting cash into $150,000. Should be easy, right?

I would absolutely do that. Actually, I've already done it via charity contests. The problem is, I don't want to give my identity out on here. You guys ever wonder why Einhorn had a 120%+ return on his simulation for 2016, but Greenlight Capital only had a 9% return over the same period?

The reason you can get a 50% return regardless of how the stock market moves is because when you manage a portfolio of only $1 million you can almost completely eliminate market risk - you cannot do that with a $10 billion fund. Surprised you guys didn't know that...

you can create an investopedia account and provide sufficient proof without showing your identity.


and yes, a smaller investment stake allows you some freedoms that a stake 10,000x larger does not, but that in itself does not imply that it's any easier to turn it into massive gains.

Yes that is exactly what it means - and Warren Buffett and every fund manager agrees. I will create that Investopedia simulation thing this week and post here.

Seems legit...

Yes, it is possible to get better gains at smaller scales. The reason I know you are full of chit though is 2 reasons.

1. 50% annualized returns... Those kinds of returns are not something you can replicate with any regularity. (Maybe with insider trading)
2. Return will happen regardless of market movements.

So I am suppose to believe you have some super secret method that will generate 4x market returns with no risk.

Fuk the simulation. Max your lines of credit... Even at 15% interest you have 4.5 million after 5 years.

All in baby.

Ohh I’ll be in later but lutz.


50% average


Really?

OK now you guys are just twisting my words and I don't appreciate that. I specifically said I can achieve "annualized returns of 50% over the next 5 years." I never said I had a magical method to return exactly 50% over a perfect 365 days. And yes, because of the small investment size I can eliminate (OK - not eliminate, but extremely minimize) market risk.

I can achieve this through pure fundamental investing, so no, I do not have a super secret method. Although there are super secret methods out there. Don't believe me? Check out the Medallion Fund at Renaissance Technologies. Most people would give their left nut to be in that fund - and that's a multi billion dollar fund. I don't know jack $hit about high frequency trading though - wish I did.

And in case you think there are NO secret methods to beat the market.. here are the returns from the Medallion Fund. Yes, Ren Tec is an anomaly, but they have a proven system to beat the market. Granted, it is high frequency and far above a normal person's comprehension, but it does exist. But what makes it really crazy is it's a multi billion dollar fund.

main-qimg-40ef98164c34e11616f0587f58b4111b.jpg

if you read up on them, you'll see that they run 180 degrees opposite to your recommendations "if you're willing to really put in the work and spend hundreds of hours educating and practicing then yes, I believe individuals do have the ability to beat the market."

they avoid financial education like the plague and instead do massive data crunching (petabytes worth) and statistical projections to trend behaviors and patterns. literally the opposite of what you've recommended.

Wow thanks captain obvious for reiterating something I already said. If you think quant funds aren't a growing trend on Wall Street you're nuts. My point is, there is a black box beating the market. People are moving towards quant funds because they see them generating alpha. That does not mean fundamental investing doesn't work as well. They are 2 completely different strategies but both can achieve alpha.

I’m not going to do my full wall of text tonight but I will leave this which does a good explanation.

https://www.investopedia.com/article...-companies.asp


Public companies are worth simply whatever people think they’re worth that day or what some program does, and in modern times almost absolutely no relationship to the real value.

It’s weird.

Their price can fluctuate based on industry halo effect, index fund movement, etc. etc. absolutely no relation to what the business is really worth.

Everything in the world is only worth what someone is willing to buy it for....


With private companies you need to do a lot more homework and hands on verification of their value.

You need to know WTF you’re doing reading financial statements.

More importantly you need to know how to verify them.

How to verify inventory, assets, does the reality of the operation match the books? (cooked books)

Are there Legal Liability issues need to be considered? Does the property they own have any EPA issues or environmental impact study issues? Zoning regulation? Noncompliant ADA issues, building permit problems? Ordinance violations? Etc etc.

Does the process of the business match federal/state lavor laws and OSHA compliance?

Talk to their employees..... is there fake payroll?

One of the biggest asset to any company is it’s people, if you were buying out the portion of an exiting owner are they caring people with them?

When you are doing a buy out often people try to make their businesses look much more profitable in the reality for a quick sale.

I could go on forever about this...

For everything always understand- Why?

In private businesses the money is there, and the money is inrevenue

As far as the way the above conversation is going regarding the public stock market, I don’t even...

In my early early years I did the whole day trading gig-

Charlatans everywhere...

You can’t and won’t beat the computers at their game, the math and comp sci whiz brahs actually fight for distance away from the main trading frames for extra microseconds on their algorithms.

Part of me feels like it’s an ethical dilemma of possibly placing people in needless danger by giving hopes on beating the market.

99% like I said before it’s a futile effort. Index and call it a day.

An individual does have advantages that a fund manager doesn’t in flexibility and obligation, where as the fund manager has information, technology, infrastructure, buying power, and other major advantages.


If someone has a vast array of general business as well as market knowledge, I find it very possible to occasionally find moments of opportunity in public trading.


I highly despise capital gains tax and any talk of increasing them whatsoever.

That being said if I could push a button and do one thing to help fix the market some—

I would make an extreme short term capital gains tax of 99.9% on all trades bought and sold within 48 hours. Heck maybe even 100%.

Then you continue having the current regular short term and long term.

This...I'm a sr financial analyst for 25 years, this guy is a joke of all jokes

Getting 50% return...year after year, sign me up

Lol like I said charlatans everywhere...


Well sir, after 25 years in the business, would you mind giving me your expert opinion?















Who’s the hottest business journalist chick?

To be fair I think we only should expect returns like that when Trump is in office. Nothing but straight down otherwise.

Even better returns than the funds Bernie Madoff managed!!

Realistically the only way a pleb can is through purchasing bonds issued by that private business.

The other two ways would be to...
Issue them a loan...
or
Have enough money that you go shark tank on their ass and give them money in exchange for ownership stake or product royalties.

If you don't have millions you really can't do either of those options.

I look at bonds in that category as a version of arms length investment - AA+ or in range meh, maybe

So many other options for passive investments.


What you are referring to as “shark tank” is one of the main ways you make money in private business investments.

It can’t be too passive though.

I always find a good honest fair deal with a good group of co-owners and a solid business model is the long term win.

The what I call “punking them” you see on the various tv shows sometimes isn’t really the winning approach to me.


Yea you do gotta have some $$ for sure, but you don’t need millions at first.

Then you've never worked in asset management. Because you would have met many analysts and PMs who retired at 30 to manage their own money because they can achieve those returns. Funny you're a "Sr Financial Analyst" like that even means something. You could be working at a small business doing budgeting with that worthless title.