Investing in early-stage companies makes shareholders more money than any other investment, bar none.
In fact, nothing else even comes close to the potential unlocked by well-placed purchases of stock in pre-profit,
pre-mass commercialization firms — provided, of course, that those firms end up making good on that potential and hitting the big
Those billionaire entrepreneurs you see on the covers of Forbes and Fortune more than likely got
there by owning chunks of these small, development-stage enterprises and then waiting the right amount of time to see skyrocketing gains.
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I'm not talking about 100% or even 1,000% profit, but profit that's in a totally different realm
An investment in Google (NASDAQ: GOOG), for example, back in the late '90s, would have yielded as much as $10,000
for every dollar invested.
Or, if you prefer to be more technical, a 1,000,000% profit.
Facebook (NASDAQ: FB) gave its seed investors similar returns, helping some now-famous venture capitalists bank 9- and
10-figure profits from relatively modest risks.
Wall Street heavy hitter Reid Hoffman, who only staked $40,000, walked away with better than half a billion when the
company went public back in May of 2012.
This sort of super-speculative investing is how the rich get much, much, much richer in a hurry.
Bill Gates is Betting the House on THIS
Bill Gates, founder of Microsoft and one of the world's richest men, is betting the house on a new technology that
could make you a pile of money.
In short, Gates has declared this the next world-changing technology. He believes it is so life-altering that soon
we'll find one in every home.
He even went so far as to launch an entire division dedicated to this technology at Microsoft.
And here's the most important part: If you get in now, on the ground floor, this emerging technology could turn every
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Risk... It Fuels Profit But Can Also Burn You
Unfortunately, with potential reward also comes risk — the kind not often found in mainstream stocks.
One of the biggest pitfalls is the kind I ran into just a few weeks ago, right along with my subscribers.
Unlike Google and Facebook, which grew to giant sizes before ever going public, many early-stage companies are public
long before their brands become world famous.
Because these investments are open to non-professional investors, and their shares can be bought through basic online
trading platforms like Scottrade, E-Trade, and Ameritrade, they represent the closest most investors will ever come to true venture
The flip side of this, however, is the danger that stems from those very same advantages.
Let me explain.
Several weeks ago, I wrote about a small but highly prospective tech company that specializes in information
technology for the aerospace industry.
This company's products and services manage data produced by modern airliners while they're in flight.
Things like speed, weather conditions, and the status of all onboard systems are neatly collected, catalogued, and
displayed for pilots and operators on the ground to use to make travel safer and more efficient.
I knew the business model was poised for growth the moment I read about it. It was the kind of universal integration
that the airline industry wanted and needed.
And with its products and services already used by a large chunk of the industry, I also knew this company
was strategically well positioned to grow radically as more and more carriers sign on.
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The Perfect Balance: Ideas and Metrics
It was a no-brainer as far as seeing future potential, and yes, it was already traded publicly.
The problem was that this stock was barely trading... just a few thousand shares a day on average.
Nevertheless, with share prices in the mid-$2 range, I figured that the total value of the daily traded volume would be
enough to stabilize a pack of new buyers.
So I wrote about it.
And I then published what I wrote to a file of around 2,000 fairly active traders — subscribers to my
I expected a volume spike after that, but what happened shocked just about everyone involved.
The initial write-up introduced the stock to readers right around the $2.70/share mark, along with a note that warned
trading it above $3 might be a bit too aggressive, and that readers needed to exercise restraint to ensure the stock didn't run off into
territory that could not be sustained in the weeks moving forward.
People didn't listen to that warning, unfortunately, and within an hour or so, the stock was trading in the
mid-$3 range, with volume several times the normal daily average.
By the end of the trading day, which was a Friday, shares had hit $4, which, incidentally, was my 12-month target for
I went home for the weekend already knowing what my first move come Monday morning would be.
When I returned to my desk the following week, I immediately issued a special update to those same readers, reiterating
my concern about chasing the stock.
I also added to expect a correction that day, because $4 pricing for a stock that had been in mid-$2 territory the
previous trading session was not sustainable on just a flurry of new buying.
By late morning, that prediction came true, as shares tumbled from $4 to the low- to mid-$3 range.
Insanity, Round Two
I felt vindicated, but only momentarily, as the readers started opening their emails and doing exactly what I warned
them not to.
They chased the stock, almost right back up to where it had closed the previous week — in the high $3s.
I wasn't really baffled by this so much as annoyed.
Traders are human, after all, and they react to high-stress situations as such.
Tell them that they missed the bus and not to take risks to hop onto it so late in the game, and they'll defy the logic
because there's nothing worse for an amateur trader than the feeling of being left behind.
Except investing isn't the same as a high school party. Missing out doesn't mean anything at all to your social
standing. In fact, knowing when not to trade is half of the work that seasoned investors do on a day-to-day basis.
Because while coming to a party late in real life will still provide some benefit, arriving late to a running stock
will hurt you.
I find myself repeating these lessons to my readers on a regular basis, and I believe that for the best and most
disciplined of them, they do sink in.
The very next company I wrote about only traded above my prescribed buy-under momentarily, before settling down right
to where I said it should be.
Trading stably at those manageable levels, the next push upwards will be from news or other organic forces, as opposed
to the combined strength of scores of manic, over-anxious investors.
The Google Profit Loophole
Google stock is pretty pricey... sitting around $700 per share right now.
However, if you know about the profit loophole known as "Internet Royalties," you could actually bank $2,058 per
You don't have to own Google stock either. And you don't have to sign up for any programs or fill out any
The best part is you can get started for less than $100.
Check out how to get started
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With Time Comes Sanity
Eventually, the same thing happened with the aerospace stock as well, as it settled down into the low $3 range —
right where I anticipated it could stay while we waited for news and earnings announcements to take hold.
So it turns out that although it might take more time than I'd like, people do eventually learn to control their
And that's the reason I'm writing this today.
Because while readers of my premium newsletter face this lesson on a regular basis, I think it's just as important for
everyone interested in investing.
Becoming a successful investor is as much about timing as it is about deciding where to invest in the first place.
Timing can make a good stock bad, and vice versa.
In this game, there is no such thing as being fashionably late.
And the sooner that ironclad rule settles in your mind, the sooner you can start avoiding perhaps the biggest pitfall
For those who want to learn more about the stock I just talked about, as well as many others with venture-level gain
potential, click here.
You'll see how these early-stage companies work, how and when to become a shareholder, and how and when to
It's information that I wish I had access to when I was starting out, and it's available to you right now.
Fortune favors the bold,
@AlexKoyfman on Twitter
Coming to us from an already impressive career as an independent trader and private investor, Alex's specialty is
in the often misunderstood but highly profitable development-stage microcap sector. Focusing on young, aggressive, innovative biotech and technology
firms from the U.S. and Canada, Alex has built a track record most Wall Street hedge funders would envy. Alex contributes his thoughts and insights
regularly to Wealth Daily. To learn more about Alex, click here.