To make a real fortune in equities, you must understand “private, not public”
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From Bill Bonner, editor, The Bill Bonner Letter: The insight behind the principle of “private, not public” is simple. You make money by knowing things:
How to make a good bottle of wine, and how to sell it. How to publish a good newspaper. How to write a “killer app.” How to produce a blockbuster movie.
How to invest in a great company. And how to find someone who can make a business succeed.
A small, private business is the best way to make money because you can be very close to it—close enough to understand it, judge the risks, and make it
work yourself. The further you get from the source of knowledge, the more the signal is distorted. Up close… the information is real and immediate. By
the time it makes its way to the general public, it is indistinct and often worthless.
Public knowledge is mostly what “everybody knows,” and it is mostly things that aren’t so.
Likewise, the further you get from the source of profits, the fewer profits there are for you. Managers, CEOs, venture capitalists, lawyers,
consultants—all take a share before you get them. Pet projects are funded. Bonuses awarded. M&A deals approved.
Often, the insiders are so busy distributing the gains—or goosing up the stock price so they can claim their options—they forget how to run the business.
Then, you don’t get any profits at all.
Private information (the knowledge you discover for yourself) is more valuable than public information (things you read in the paper). Private companies
are more valuable than public companies, too.
Everyone can “know” that robots will replace more and more employees, for example. And anyone can invest in a robot company. But the real money comes from
knowing what others don’t know. The real money comes from knowing, personally, about a new technology that makes a special kind of robot function
better—and owning the company that makes it!
Reeves’ Note: Regular Daily readers know Bill is the founder of Agora, Inc., the Palm Beach Research Group’s parent company. Bill believes America’s (and the
world’s) debt-fueled extravagance means the next financial crisis is inevitable. You can learn more about what happens “when the ATMs stop working” right here.
If you’re looking for an alternative way to own your own business instead of investing in public companies, consider our next item…