Investors in private startups pocketed a fortune last quarter…
According to a report released last week, they took home $103.9 billion.
That’s a record high — and as you’re about to learn, those profits are expected to keep flowing.
So today, I’ll show you why this is happening…
And then I’ll share two easy ways to get in on the action yourself.
How Private Investors Make Profits
Before I tell you how to take advantage of this profit window, let me back up for a moment…
Let me explain how investors in private startups make money.
Startup investors make money when a company they invested in has an “exit.” These exits happen in two main ways:
- When a startup gets acquired by a bigger company in an M&A transaction, or
- When the startup goes public in an IPO.
And as it turns out, Q3 of 2020 was a record-setting quarter for these exits…
A Record-Setting Quarter for Private Investors
The first half of the year was a disaster…
The coronavirus put a halt to everything, including exits.
But Q3 brought a massive uptick in activity.
For example, as you can see in the chart below (courtesy of PitchBook-NVCA Venture Monitor), exit value increased 292.5% versus Q3 2019.
That was the 2nd-highest quarterly total in PitchBook’s historical dataset, just behind Q2 2019.
What do all these exits mean for their investors?
They mean huge windfalls of profits!
(FYI, even when you factor in the winners and the losers, over the past 20 years, these exits have returned an average of 55% per year. At 55% per year, in 20 years, you could turn a tiny $500 investment into more than $3.2 million.)
Just six months ago, this sort of exit activity seemed impossible.
So what happened?
The 3 Reasons Behind These Profits
This burst of exit activity is due to three main reasons.
New Sectors Soaring: Covid-19 has given a boost not just to biotech, but to industries like Fintech, Edtech, and Telemedicine. The way we work, learn, and receive healthcare are changing — and innovative startups leading the charge are becoming valuable very quickly.
Macro Environment: Low interest rates and a booming stock market are giving investors confidence that innovative startups will command high prices as public companies.
SPACs: As noted earlier, M&A and IPOs are the two main ways that startups exit. But recently, a third way has gained in popularity: a “special purpose acquisition company,” or SPAC.
In Q3, public listings drove the spike in exits — IPOs like Snowflake (NYSE: SNOW), Asana (NYSE: ASAN), and Unity (NYSE: U).
The things is, as PitchBook explained, the strong performance of these stocks in the public markets will “likely drive more IPO” activity…
And for startup investors, it’ll drive more profits.
So — are you in?
Two Easy Ways to Get Started
Crowdability offers a multitude of free resources to make sure you see current startup deals that are available for investment…
And to make sure you know what to do once you find a deal you’re interested in.
For starters, look at our weekly “Deals” email. We send this out every Monday at 11am EST, and it contains a handful of new startup deals for you to explore.
Second, check out our free white papers like “Tips from the Pros.” These easy-to-read reports will teach you how to separate the good deals from the bad.
The profit window is now open — take advantage of it!
Friday Charts: The E-Commerce Extravaganza (And Opportunity) Starts Now…
It’s Friday in the Trend Trader Daily Nation.
If you’re a regular, you know the drill by now. So go ahead and scroll down.
For the newbies, here’s the deal…
Each Friday, I embrace the adage that “a picture is worth a thousand words.”
And I select a handful of graphics to put important economic and investment news into perspective for you.
All it takes is a quick glance — and you’ll be up to speed and poised to profit.
So let’s get to it…
Pandemic Be Damned! There’s Shopping to Be Done
Yesterday was Turkey Day. And today? Well, it’s the start of a retail shopping extravaganza.
But this year, because of the pandemic, we’ll be taking all of our buying online. All $39.1 billion worth of it, according to forecasts from eMarketer.
That’s a lot of loot to spend. And it certainly won’t happen all in one day. You see, as it turns out, Black Friday isn’t the biggest shopping day of the year anymore.
Cyber Monday takes that crown. Take a look:
What’s the investment takeaway here? Simply put, it’s time to bet big on e-commerce because the pandemic is permanently reshaping buying behavior.
Rest assured, I’m scouring the markets right now for under-valued, under-followed small caps levered to this trend. So stay tuned!
In the interim, have you placed your bets on semiconductors yet?
Push All Your Chips in Here…
On Tuesday, I alluded to the red-hot performance of the chip sector.
Consider this a more blatant call to place your bets, stat!
As you can see, semiconductor stocks aren’t just trouncing the overall market (S&P 500), they’re trouncing the entire tech sector, too.
While I’ve been pounding the table to buy chip stocks ever since the pandemic hit, the “Johnny-Come-Latelies” on Wall Street are finally catching on, too.
Consider: Bank of America’s wonder-boy analysts have a new research note out this week telling clients to expect growth rates to quadruple.
That’s good news for us, as it promises to bring a flood of new money into the sector, driving prices for chip stocks to fresh all-time highs.
That includes LAM Research (LRCX), which I mentioned to you a few weeks ago (see here).
It’s already up 30% and counting.
You can’t say we don’t give you profitable investment information — for free!
By the way, Bank of America’s analysts agree with my bullishness on LAM. So much so that they just raised their price target to $485.
Keep going, boys! You’re still being too conservative.
That’s it for this week! Catch you on the flip side with more fresh trend-trading insights.
As always, if you have any questions, comments or complaints, fire away at email@example.com. I read every note you send me, and keep in mind that I might respond to any particularly nasty ones in a future column… so don’t say I didn’t warn you!
Ahead of the tape,
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The #1 Key to the Biggest Biotech Profits
As Wayne and I have been explaining recently, there’s one trend you absolutely need to be investing in right now:
Most investors avoid this lucrative sector because, frankly, it can seem overwhelming. “I’m not a doctor!” they say. “How am I supposed to predict which drugs will get FDA approval?”
So today, we’d like to point you to a specific biotech company you should own right now.
Why? Because in the next 45 days, it could realistically double.
But before I tell you more, let me explain why investing in biotech is so important right now.
Public and Private Investors Can’t Get Enough
As our partner Lou Basenese wrote yesterday:
“Being a profitable trend trader means following big money flows, no matter where they’re going. And today, the smart money is sprinting, faster than Usain Bolt, into biotech.”
- The SPDR S&P Biotech ETF (XBI) is up 78% since the March bottom. That trounces the returns of the Nasdaq (+64%) and the S&P 500 index (+44%) over the same time period.
- Private capital is flooding into biotechs. During Q2 2020, venture funding into U.S.-based biotechs reached $6.4 billion. That’s the single highest quarterly total ever.
- Public market investors can’t get enough, either. Case in point: 40% of all IPO and follow-on financings in the market this year have been for biotechs. In other words, the overwhelming majority of new money being put to work in the public market is going into biotech deals.
But even against this backdrop, I understand that you still might be worried about trying to pick individual biotech investments.
And that’s where some wisdom from Lou comes into the picture…
The #1 Key to the Biggest Biotech Profits
In a recent column for you, Lou shared a safe way to invest in the smallest and most innovative (and therefore, the most potentially profitable) biotech stocks…
You can do that via the Principal Healthcare Innovators Index ETF (BTEC).
BTEC remains a top choice today, and a safe choice.
However, as an ETF, it invests in a basket of stocks. Over 250 of them.
So, while its focus on biotech makes it possible for us to earn a market-beating return…
Because of its breadth, it’s impossible for us to maximize our profits.
To make the biggest returns — for example, to double or more our money — we need to focus on individual biotech stocks.
And that’s where Lou’s live event comes into the picture…
“Buy this Biotech Stock!”
You see, last night at 8pm Eastern, Lou hosted a LIVE online event on Zoom.
During the event, Lou taught his readers how to take the guesswork out of biotech investing…
And furthermore, he shared — also, 100% free — the safest and most potentially profitable biotech stock to own right now.
As he explained, this biotech stock has already been de-risked:
- Its drug works. In fact, it works so well that the FDA allowed the company to skip Phase 3 trials and go straight to applying for full marketing approval. If granted, this drug will be on the market next year.
- An urgent need for it exists. Over 1 million people in the U.S. currently suffer from the disease it treats. Another 40,000 people each year develop it. And yet no other treatment option exists. Making matters even more urgent, most of the newly diagnosed patients are children.
- A profit delivery date has been set. In 60 days or less, we’ll know if its drug application is complete and ready for final review. (Lou fully expects that it will be.) Then, the FDA will provide a specific date where it will issue a final approval. Anticipation of this decision alone could lead shares to double… and they could double again when approval is granted.
The Ticker Symbol of Lou’s #1 Biotech Stock
And now I’ve got some very good news to share…
Lou let us record his event for all of our Crowdability readers…
As Lou wrote before he went live,
“No gimmicks here. During the event, I’ll be sharing the company’s name and ticker symbol, as well as my investment thesis for it.”
Again, this is the identity of Lou’s #1 biotech stock to buy right now…
And he’d like to share it with you — for free.
10 Reasons I’m Thankful…
With Thanksgiving upon us, I’m forgoing our regular content and financial analysis to count my blessings, Trend Trader Daily style.
As you’ll see, many of these blessings are still financial-related. Sorry, I can’t help it…
- I’m thankful for my losing stock recommendations from the past, as they keep me humble and working harder to perfect my craft.
- I’m thankful for all my winning stock recommendations. I imagine you are, too. (No explanation necessary.)
- I’m thankful to live in the United States where I can practice any religion, speak my mind freely, and should I feel so inclined, own a gun.
- I’m thankful that I work with a team that keeps their word and is committed to delivering quality, no matter how much time and effort it entails.
- I’m thankful for the 1980s. It was the only era where we could dress up like clowns, or in fluorescent colored clothing, and be considered fashionable. Also: the music of that era is unbeatable. Disagree if you must, but there’s no changing my mind.
- I’m thankful for new relationships (both business and personal), as they prove that the rewards for enduring dark days and bad relationships far outweigh the struggles.
- I’m thankful I escaped growing up in New Jersey without having a heavy accent. Otherwise, my professional career might have been severely stunted. No offense to youse other guys that weren’t as lucky.
- Speaking of New Jersey, I’m thankful for Joey’s House of Pizza in my current hometown of Nashville. There’s nothing like authentic northeast pizza to stir up the nostalgia of growing up in the greatest part of the country.
- I’m thankful the investment markets are dynamic. It keeps my job exciting and unpredictable, and ensures that no one can maintain an unfair advantage for long.
- I’m thankful for my many investing mentors — Warren Buffett, Peter Lynch, Sir John Templeton, David Dreman, James Bagwell, and Alexander Green, among others.
- I’m thankful for forgiveness. Without it, I would never have been able to spend an unforgettable weekend with my estranged brother last year before his untimely passing.
- I’m thankful for our loyal Trend Trader Daily readers. Without you, I’d be muzzled and working for a bulge bracket Wall Street firm.
- Most important of all, I’m thankful for my family… and my three kids, in particular. Their innocent laughter always seems to take away my concerns, even if just for a moment.
In case you’re counting, I didn’t stop at 10 reasons.
That’s because, even in these strange Covid-19 times, there’s more to be thankful for than to bemoan.
Or as Henry David Thoreau wrote, “I am grateful for what I am and have. My thanksgiving is perpetual.”
So if you’re feeling thankful, too, here are two ways you could consider giving back.
Two Actions to Take Today
First, take a moment to count your own blessings. I’m confident a mere 60 seconds of reflection will overwhelm you with gratitude.
Second, if I’ve ever done something to help make you money, make you laugh, or improve your financial wisdom, I’d ask that you consider joining me in donating to a very worthy cause:
Located in Nicaragua, the second poorest country in the Western Hemisphere, the clinic provides free and low-cost medical care to over 30,000 patients in the isolated villages of Limon, Rancho Santana, and 27 surrounding communities.
Think prenatal care, basic prescriptions, treatment for asthma attacks and allergic reactions, and general checkups. Things we take for granted because walk-in clinics and hospitals abound in the United States.
Without the vision and passion of my friend and former boss, Julia Guth, the clinic would never have been built.
Here’s the thing. As a U.S.-based 501(c)(3) non-profit organization, the clinic depends solely on private donations to continue operating. And giving, particularly in developing countries, is down significantly this year. At a time when Nicaragua severely needs it, too.
You see, not only is the country suffering through the pandemic like the rest of the world, but Nicaragua was also hit with two devastating hurricanes.
I recognize that times remain tough, and that countless other causes deserve your attention and consideration. As a decade-long supporter of the clinic, though, I can personally attest that even small contributions will make an immediate difference.
I’ll be making a donation today. And I hope you’ll join me.
After all, as the playwright Thorton Wilder said, “Money is like manure; it’s not worth a thing unless it’s spread around encouraging young things to grow.”
And if you cannot or choose not to donate, no worries. I’m thankful for your consideration, and for the continued confidence you place in me as a reader of Trend Trader Daily.
As always, if you have any thoughts you’d like to share, don’t hesitate to contact us at firstname.lastname@example.org.
I wish you and your family a very healthy, safe, and happy Thanksgiving… whether you’re celebrating with them in person, or from afar.
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