Easy Investing for the Little Guy
Tom Kerr writing on investing…
The other day I was watching “March Madness” college basketball with a friend when he asked me if I knew anything about investing in the stock market.
I suddenly experienced one of those past-life flashbacks. Not the reincarnation kind, but the kind where I’m reminded that 25 years ago I was a card-carrying member of corporate American culture.
I recalled how I used to stay up late at night studying to take the so-called “blue sky test” that you have to pass to become a stock broker.
The term “blue sky” was coined by a government official who used it to describe new stock offerings that have been given the all-clear signal by SEC regulators.
Once that happens the stock can be purchased by the general public…and that’s the kind of useless trivia your brain accumulates while cramming for the brokerage exam.
I never sat for that exam because I wound up trading in my pinstripe suits for a pair of denim overalls…after I sold my suburban home with the manicured lawn and moved to a cabin in the woods. My front yard became a two-acre meadow surrounded by dense forest and instead of a chain link fence for a boundary line I had a gurgling spring-fed creek.
In the city, the sky was rarely true-blue…usually it was a muted gray with yellow undertones, due to all the industrial pollution. Out in the country, though, it was vivid as a robin’s egg…and the artificial Wall Street jargon “blue sky” faded from my memory. (So did the chronic cough I had from breathing city air.)
“Yeah, I know a little,” I told my friend. “Or at least I used to…”
I told him about the time I made a $3,500 profit by buying stock and selling it five minutes later.
But then there was the time that I lost my shirt when the markets crashed in 1987, and it took five years to recover. After that experience I became pretty disillusioned with everything related to Wall Street.
Years later I was on my computer, using Google, when I came across a news bulletin that said the very same Google – which was still a private company back then – was seeking investors. I jumped on the phone and called five different brokerage firms and tried to buy shares.
They all said the same thing – you cannot invest early. Those opportunities are reserved for Wall Street insiders like hedge funds – and you have to wait until the stock goes public.
Once again I was frustrated by the way the investment markets work and always seem to favor elite insiders with deep pockets, while making money off the little guy.
“Too bad they didn’t have Title III back then,” my friend said.
Title III legislation, as we reported in Independence Monthly, August 2016, means you can now buy shares in a start-up company through crowdfunding…without being an accredited investor.
This is a whole new ball game for the little guy.
You can put your money into a small company you know something about that triggers your interest. Come to think of it…if you’re considering a small start-up business and need investors, crowdfunding may work for you too.
Unfortunately, when I wanted to invest in the Google start-up, it wasn’t yet legal.
But last spring Title III did finally legalize early investment in start-ups.
My buddy knows I don’t have a favorite college basketball team…I just wait until the second half of the game and then root like crazy for the underdogs.
Hey, whether it’s sports or stocks or life in general, I say “Score one for the little guy!”
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