There’s no doubt that Wall Street is the epicenter of capitalism.
A playground for the most wealthy, powerful figures in the world.
For over a century, big banks monopolized most of that wealth.
But in 2009, every fat cat banker on Wall Street started playing defense.
At the time, the housing bubble had just exploded and the global economy was in ruins.
Having leveraged the world economy to the brink of disaster, lawmakers had no choice but to enforce strict regulations.
Today, big banks have been neutered.
But guess what?
While big banks are on lockdown, other institutions are cornering more of the market instead.
Like these guys…
Institutions whose moneymaking prowess is so incredible… so powerful… so consistently profitable… that they’d love to keep their methods from the public eye.
Well… they can’t.
I’ve taken their best-kept secrets and formulated a strategy that everyday investors (not just the super-rich) can use to mint profits for themselves…
Wall Street’s Perennial Winners
When private equity firms came to the fore in the 1980s, there were only six funds worth $1 billion or more.
Today, these outfits have become formidable (yet less-heralded) juggernauts of 21st century capitalism.
Mega venture capital firms like The Blackstone Group (BX), Apollo Global Management (APO), The Carlyle Group (CG), and TPG Capital are now competing toe to toe with behemoths like Goldman Sachs (GS), Morgan Stanley (MS), Citigroup (C) and UBS (UBS).
And their long-term returns are spectacular.
According to the National Venture Capitalist Association (NVCA) and Cambridge Associates, the U.S. Venture Capital Index has tripled the returns of the Dow Jones, S&P 500 and Nasdaq over the past 15- and 20-year periods.
Impressive. But why should they have exclusive rights to keep notching market-beating gains?
They don’t! Not since I’ve taken their moneymaking blueprint and turned it into my own foolproof stock analysis system. (More on this in a second.)
These days, there’s so much institutional money flooding into private equity, it’s been dubbed “The New Wall Street.”
Forbes says a revival in the VC-backed IPO market in 2013 will continue this year. An NVCA survey shows that significantly more VC insiders expect a bigger IPO market, more investment and bigger returns in 2014.
Much of it will come from the tech sector, with fast-growing Dropbox, Square, Airbnb and Evernote all set for IPOs this year.
However, like its predecessor – let’s call it “The Old Wall Street” – private equity firms are brutally playing the system like investment banks were.
Here’s what I mean…
Wall Street’s New Gamers
Being a private equity fund is an advantage in itself. It’s both an investment strategy and a vehicle that’s only available to fund managers and wealthy institutional investors.
And while they assume greater risk by investing in companies before they go public, the trade-off is pretty sweet, since they’re able to get in at much cheaper prices than those at launch time.
But that’s not the half of it…
For almost a decade, many of the largest and most prominent private equity firms have increased their bottom line with very little regulatory oversight, or limitations.
~ Advantage #1: Carry the Interest… Lower the Tax
Since private equity firms buy a company’s preferred shares, they’re not required to pay regular income tax on the returns. Instead, they “carry the interest” to the following year and pay capital gains tax instead.
It’s a pretty nice deal, given that the capital gains tax rate is 20%, versus the 39.6% that you and I would pay.
It means venture capital firms save billions in tax benefits.
~ Advantage #2: Financial Flipping
Venture capital firms “flip” companies like real estate speculators flip houses.
But with a key difference.
In this case, a venture fund buys a company with a lot of debt, but rather than “fixing it up,” it changes as little as possible before selling to the highest bidder for a quick profit.
~ Advantage #3: Transaction Fees
Private equity firms typically charge their investors transaction fees, which have amounted to around $2 billion over the last decade. The worst part? They’re charging these fees despite the fact that they’re not registered as brokerages with the SEC.
Don’t Get Mad… Get Profits
These advantages just aren’t fair, right?
Well, you have two choices here…
You can either cry about it. Or, you can come with me as I show you how to profit from it…
You see, the reality is, this type of opportunistic behavior isn’t going to change, no matter how much we moan about it.
And as the saying goes, “Don’t get mad… get even.”
As I said last week, “Venture capitalists shouldn’t own the rights to tech fortunes.”
They may game the system…
They may have cornered the market on profits…
But that doesn’t mean we can’t profit, too.
That’s precisely why I created my C.H.A.O.S. Strategy.
And here’s the beauty of it…
It’s ripped straight from the grubby clutches of Wall Street’s venture capital firms – an adapted version of the very same techniques that they use to value companies – and mint profits.
I’ve demonstrated how it works over the past couple of weeks, and if you want to profit, too, your best bet is to follow the strategy to the letter.
You don’t have long to wait, either.
Next time, I’ll apply the C.H.A.O.S. System to a brand-new company, so stay tuned. I assure you, it’s one you won’t want to miss…
Your eyes in the Pipeline,