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Death of the Tech IPO

Death of the Tech IPO
June 01
08:45 2017

(InvestmentU) – I’ve seen this movie before…

Wall Street is once again looking to tech stocks to backstop the next leg of the market’s extended bull run.

So far this year, the “Big Five” Silicon Valley giants haven’t disappointed…

Alphabet (Nasdaq: GOOG) is hitting record highs and is up 21% for the year.

Apple (Nasdaq: AAPL) has done the best, up more than 31%.

Facebook (Nasdaq: FB) has surged up the charts 27%.

Amazon (Nasdaq: AMZN) is on its heels at 26%.

The worst of the bunch, Microsoft (Nasdaq: MSFT), has crept up more than 9%, still better than the S&P 500’s 7%-plus climb.

Insiders have noticed.

“Tech is, by far, the most exciting sector. They’re performing above expectations,” says Daniel Morgan, portfolio manager at Synovus Trust.

Yes, they are. Still, the bull is in its ninth year. Might it be too late to get into these tech stocks?

Sam Stovall, chief investment strategist at CFRA Research, says, “Despite its age and rich valuation, this bull market does not appear to us to be ready to throw in the towel.”

Morgan and Stovall may well be right. Frankly, I’d rather not take the chance. I’ve discovered a much better way to invest in Silicon Valley tech stocks.

What Happened to IPO Day

I have none other than Facebook to thank for my discovery.

It began with a little research into its stock performance.

Facebook’s shares dove soon after its IPO. But then it corrected course. Investors who got the timing right had a shot at 302% gains.

You’re probably thinking, that’s not bad. But to me, it just seemed OK, given Facebook’s massive global growth.

So I looked at another world conqueror: Alphabet. Since IPO, its shares have increased 1,700%. That was better, but I still felt a little underwhelmed.

So I looked at the other tech giants…

Getting IPO shares in Microsoft would have netted you 92,000%. Amazon would have made you 81,000%. And Apple would have handed you 51,000%.

Now that’s more like it.

I thought there had to be a reason why these three companies did orders of magnitude better than Facebook and Alphabet. I dug into dozens of variables and metrics. When at last I found the root cause, I couldn’t believe it.

It was amazingly simple… practically staring me in the face…

The market cap of these companies explained everything!

Microsoft, Amazon and Apple IPO’d at caps of roughly $500 million, $438 million and $1.2 billion, respectively. But that was all back in the 1980s and ‘90s.

Facebook IPO’d at $68 billion. That’s 56 times the size of Apple at IPO. Alphabet’s market cap was $23 billion when it IPO’d.

It took a while, but the lesson I learned was worth it…

When tech companies wait to IPO and let their market values rise into the tens of billions, even the earliest investors don’t make out nearly as well as they used to.

This has particular relevance to today’s tech companies.

When will Uber IPO? Who knows? In its 10th year and sporting a valuation of $68 billion, it doesn’t really matter. Public market investors have already missed the boat.

How about Chinese smartphone maker Xiaomi? It’s in its seventh year and carries a valuation of $46 billion. Its IPO will generate a great deal of excitement. And it will be completely unwarranted. The biggest gains have already come and gone.

And Airbnb? It was founded back in 2008 and has grown into a company with a $31 billion valuation. That’s very exciting growth, but you won’t benefit much from it.

More and more startups are waiting longer to declare their intentions to IPO.

Getting in on IPO day – for these and many other exciting tech companies – won’t give you the payday that investors got in the ‘80s and ‘90s.

Fortunately, I have a solution for you.

These Simple Technical Analysis Tools Are Vital to Your Investing Success

Technical analysis is the study of price and volume activity in the stock market, and there are three powerful tools that will help you find buying opportunities in the market.

Any investor can become a technical analysis pro by using these simple buy and sell indicators.

We’ve also done the research for you and found five stocks hitting these urgent buy signals right now.
Read on….

The New Early Investors

Investing early doesn’t have to mean buying shares on IPO day or the weeks that follow.

It can mean buying shares way before companies IPO.

Investors who adopt this strategy can make pretty good money.

For example, multimillionaire investor Peter Thiel made 200,000% gains on Facebook. Again, public stock investors made 302%.

The difference in the returns you can make pre-IPO and post-IPO is stunning.

Here are two more examples:

Pre-IPO investors in Twitter (NYSE: TWTR) made 50,000%. Investor after IPO made 73%.

Pre-IPO investors in Snap (NYSE: SNAP) made 24,000%. Investors after IPO made 12%.

The tech market with the needle-moving returns is not the Nasdaq anymore.

That’s ancient history.

It’s the private startup market. Granted, you have to choose carefully. The Twitters of the world don’t grow on trees.

Silicon Valley “conventional wisdom” says that about 15 extraordinary tech companies are born every year. I think that number is going up.

A big reason? Crowdfunding.

That’s what I do. I help companies that don’t want venture capital funding get their money from the crowd – hence the term “crowdfunding.”

New laws have now opened up private startup equity investment to everybody. You no longer have to be superrich or superconnected.

And it has led to more deserving startups getting funded.

The private tech startup market is open for business. It’s a more-than-worthy successor to a tired Nasdaq that is no longer able to hand out the kind of gains investors used to get.

Interested in finding the next Amazon? You won’t find it on the Nasdaq. Somebody will find it among the companies raising money privately. They’ll invest. And they’ll make pretty remarkable returns.

Could that be you? Why not? If you’re interested in this kind of tech investing, I can help you. This is what I specialize in – finding these ultra-upside companies. Just click here if you’re interested.

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