It's an idea that the richest and most powerful people in the
business world almost never say out loud.
But takeover king Wilbur Ross knows it. So does Herb Allen,
the most exclusive banker in the world. And you can bet your
boots that billionaire Warren Buffett knows what I'm about to
tell you. In fact, he's often said these are the types of deals
he wants to pursue...
Here's Wall Street's dirty little secret: The best investments
in the world -- those with the biggest returns and some of the
highest yields -- are not listed on any stock market.
They're privately held...
#-ad_banner-#According to an investing trade group report, as
of March 2013, the private market outperformed the S&P 500
(including dividends) by 2.6 percentage points, 2.2 percentage
points and 6.1 percentage points for three-, five- and 10-year
And it's not limited to just recent performance. A study by
professors at Duke and Ohio State covering a period from 1984
through 2010 found that
private market investors earned 18% more than the S&P
It's proof that when it comes to investing, the rich really
are different -- they invest in better companies.
But exactly how do they do this?
Well, rather than buying shares on the stock exchange, savvy
big hitters write a very large check to a very special kind of
firm. To be eligible to invest like this, federal law stipulates
that an investor needs to have at least $200,000 a year in annual
income ($300,000 for a couple) and more than $1 million in net
worth, excluding a primary residence.
That is a very high bar.
Those rules block 94% of investors
The official name for these highly exclusive firms is "private
A private-equity firm has more than a pile of investor cash to
offer. It also provides executive mentoring and business advice
-- often from some of the biggest names in corporate America.
I like private equity because a lot of private-equity firms do
the exact same thing I try to do with my newsletter,
They try to find "The Next Big Thing," and they seek to invest
in it before anyone else realizes that they've found the golden
ticket. (For example, Amazon founder Jeff Bezos invested $250,000
in Google in 1998... years before it even thought about going
Here's the good news. Private equity doesn't have to be our
competitor. It can be our partner. In fact, you and I can put
private-equity and its consultants to work for us the same way
the billionaires do.
That's because there is a way around the rules that bar
ordinary investors like you and me from investing in
And as these businesses grow, their private equity backers can
get phenomenally rich...
For example, between 1973 and June 2013, Yale's endowment fund
generated average annual returns of roughly 30% in private
equity. That includes a monster return of 168.5% in the year
2000, when Yale made $2.1 billion on its private equity
Compare that 30% figure to the average gain of just 10.1% per
year for the S&P over the same time period, and you start to
see the type of impact private equity could have on your
Given the returns they've generated, it should come as no
surprise that private equity now ranks as Yale's single largest
holding. In fact, Yale invests twice as much money in private
equity as it does in regular common stocks.
And Yale's performance isn't unique -- as you'll see in a
The bottom line is that private equity firms have made
countless fortunes over the years.
But until 2007, you couldn't invest directly in private equity
unless you were either an elite institution like Yale, or you
ranked among the richest 6% of all Americans.
Fortunately for us, all of that changed in June 2007 when one
of the largest players in this notoriously secretive industry
made a surprising decision. It decided to list its shares on the
New York Stock Exchange.
Thanks to these recent developments, you can now invest
directly in a handful of the world's biggest and most lucrative
private equity firms. And with each and every deal they make, you
can reap the same rewards that the ultra wealthy have already
been enjoying for decades.
Not to mention, you could enjoy the
sky-high dividend yields many of these private equity
firms pay out each year...
Just look at the returns and yields of these five private
equity firms available to buy on the public market:
Even compared to the S&P 500's impressive total return of
32% over the same period, private equity certainly looks
You won't become a multi-millionaire overnight by investing in
private equity, but you'll have a chance to bank a tidy profit
from some of America's fastest-growing private companies. And
most importantly, you'll tap directly into the private market --
a market that's cheaper and more lucrative than regular, ho-hum
The private market is becoming unlocked for public investors, but
only if you know how to play the game. That's why I've put
together a special report --
"How To Get Employee Stock From Fast-Growing
-- that tells you everything you need to know about private
equity, including my favorite names of the bunch. To learn how to
get this report for free,
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