In the past few weeks, stocks have lost about a third of their value as the coronavirus has spread rapidly throughout the globe. And while the Dow Jones Industrial Average logged its biggest single-day gain since 1933 last week thanks to the stimulus package, many analysts and investors say the worst is yet to come.
A Goldman Sachs strategist, for instance, has warned that the S&P 500 could fall to the 2,000 level before this rout is over. If he's right, that means stocks have roughly another 20% downside from current levels.
Traditional stocks aren't the only ones being affected, though. The fastest bear market in history also seems to have put the brakes on the IPO market.
Last year was a big year for initial public offerings. While there were some high-profile disappointments like Uber (UBER) and Lyft (LYFT) -- and who can forget the WeWork debacle -- there were some serious winners in 2019 as well, like Zoom Video Communications (ZM), Grubhub (GRUB) and Luckin Coffee (LK).
The Renaissance IPO ETF (IPO), which can be viewed as a sort of barometer for the IPO sector, was up 34.4% in 2019, outpacing the broader market, which rose nearly 29%.
Before the coronavirus infected the market, there were high hopes for IPOs in 2020 as well. Airbnb, DoorDash and Robinhood are just a few of the names traders have been eagerly awaiting.
While I can't say for sure whether these or other companies will choose to postpone their IPOs, it is clear they face many more headwinds than was the case just a few months ago.
I'm sure this is disappointing for those who were planning to jump on board as soon as these companies went public in hopes of making outsized gains. But I want to explain something about IPOs to you, and I'll use Uber as an example.
The leader in the ride-hailing market was arguably the most hyped IPO of 2019. This was despite the fact that its chief rival, Lyft, which went public first, had a disappointing market debut.
Uber went public in early May at $45 per share. It was one of the largest U.S. public offerings in history, raising $8.1 billion.
Below is a chart that shows how Uber has traded since going public.
If you had entered at $45 per share, you'd be down about 40% right now. Even before the recent market turmoil, those who got in first were still looking at a loss of about 7% when the stock was trading at its February highs. Ouch!
Now let me tell you about someone named Chris Sacca. He is one of the most astute investors in the world today.
Back in 2009, Sacca put roughly $300,000 into Uber's angel investing round. As a result, his stake in Uber shot from $300,000 to $1.9 billion. That's an outlandish gain of 633,000%.
If you had done what Sacca did, you could have turned $1,000 into more than $6 million. No ordinary investor made that on Uber stock after it went public. Not even close. In fact, most of them have lost money.
The problem is, it's illegal for you to do what Sacca did.
You see, he is part of a small circle of folks who are entitled to put their money into opportunities most investors are banned from. That's why I call it "The Black Market."
Anyone who wanted in on Uber had to wait for the IPO, or until the company hit what I call "The White Market."
The financial elite like Sacca have been cleaning up, collecting million- and billion-dollar paydays thanks to "The Black Market." Average investors, on the other hand, have to wait -- sometimes years -- until these opportunities hit "The White Market." And when that happens, 95% of the gains are already gone.
The same thing that happened with Uber happened with Lyft.
Since Lyft went public in late March at $72, the stock has done nothing but go down.
If you'd invested at the IPO and held until today, you'd have lost around 60% of your money.
But that wasn't the case for the financial elite that were able to get in on Lyft before the IPO.
The popular ride-sharing company was once worth $30 million. When it went public, that figure had shot up to $24 billion.
That means what became a nightmare for ordinary investors was quite the opposite for those who were able to get in before the IPO. They made 80,900%.
You've been missing out on companies like Uber and Lyft for years. But, given that I said you aren't even allowed to invest in "The Black Market," you're probably wondering why I'm telling you about it at all.
The reason is simple. Congress passed a law that's opened up an entirely new market to the individual investor: "The Gray Market."
Average investors who tap into the "The Gray Market" don't need to have millions in the bank and they don't need to know any company presidents or CEOs. In fact, they can invest in this market with as little as $100 or $200… before companies IPO… before they're bought out for billions… and before 95% of the gains are gone.
In 2019, $120 billion was invested in startups in the United States alone. Around the world, $251 billion is being put into startups per year.
And now, for the first time in history, average investors have the chance to claim a piece of that.
Companies like Robinhood, DoorDash and Airbnb are now available to ordinary investors on "The Gray Market" before they ever go public.
Robinhood, the free stock trading platform available for your smartphone, has gone from $22 million to $5.6 billion on "The Gray Market" -- a jump of 34,400%.
Popular delivery service app DoorDash was once valued at $35 million. Today, it's worth $12.6 billion -- a 35,900% gain.
And Airbnb has soared over 2,066,567%.
For more than 150 years, the most profitable investments like this were off limits to average people. If you didn't have millions in the bank or have high-ranking connections, you were blackballed from these opportunities.
But that changed with a stroke of the pen by Congress. Buried within the legal jargon of a Great Recession law, is a string of language that instantly gave 200 million Americans access to "The Gray Market."
And I'm giving away all the details of this little-known market. Plus, I'll even show you how to find the very best investments in it... the ones I'd put my own money in.
The James West Letter
This article is supplied courtesy of Wealthpress.com