There’s a one important question that anyone investing; needs to decide before he spends time and money in the markets. There are no 100% correct answers for this while it’s a fact that you will never reach your goals if you fall short of considering where you stand…
I was looking at sales touts promising infinite yields, for folks who seem to be on lookout for immediate revenues rather than hope of forthcoming returns. It’s not surprising that the hype has caught the attention of investors who think that riches are connected to politicians and the famous. Yes they are right but partly!
Customarily they seem to capitalize on Obama’s or Bush’s income. So what is this private stock market that is kept away from ordinary investors like you and me? Well, to be precise a group of enormously money-spinning companies far beyond what you can get through regular investments in Amex, NYSE, or NASDAQ.
There have been similar sales pitches speaking of riches like “the Secret presidents 770 account” and “Mainz” income stream earned by Obama, Bush, Clinton, or the Palm Beach Letters Untouchable Account and this one is no different the ‘Private Stock Market’ nonetheless it talks about BDC’s (publicly registered companies in the United States that invest in small and mid-sized businesses).
A BDC is quite similar to venture capital fund, created by Congress in the 1980’s and is a company registered in compliance with Section 54 of the Investment Company Act of 1940. However allow smaller non-accredited investors to invest in start-up companies thus providing capital to their managements. They have potentially high dividend yields and capital appreciation in a manner similar to REIT’s that pay 90% of income in order to retain their tax status (investors are fascinated by this).
But before go on to decipher a bit of clues from the ad:
It involves a way to buy into companies that are extremely profitable…
“But don’t trade on any major exchange.
“For example, take the company GoPro…
So they are hyping some kind of private equity investment, companies that aren’t public, and need capital. And it has to be something that is easily accessible to small investors like you and me. This hints us at a BDC like Prospect Capital, and Hercules Technology Growth Capital, they characteristically take a stake at the very early stages of a thriving business… and then gross the early bird rewards.
Some more clues please…
“I haven’t even mentioned that this back door involves an extremely safe investing technique.”
The guys who put these deals together have never sold even a single share of their own.
It’s safe and hints us at insider holding too, so what’s the specific BDC the Oxford Income newsletter is peddling here, I can do a wild guess for you and you could get onto your own research at it.
Knowing that you are on the most important step in this idea, it’s Prospect Capital Corporation (PSEC) a market leader pretty consistently and a Motley Fool darling, it had announced tiny increase in dividend which would compute to around 13% a year, its share price was around $10 at the time of writing this.
PSEC is polarizing as of now it has generated a fair amount of criticism from SEC and the shareholder lawsuits pertaining to accounting questions.
Disclosure: I don’t have any positions in any stocks mentioned herein, and no plans to initiate any in the near future as well.