In A Nutshell
By: Craig Skauge
FROM THE BOOK:
“The Canadian Gold Rush Is Back!! How to Accelerate Your Wealth Outside the Stock Market”
By Carrie Mulligan, Private Market Specialist.
In its rawest form, the Exempt Market is back to basics investing. Investing in a product because one believes in the underlying idea and people behind the idea, not because they anticipate that a tweet from a TV personality or announcement from the federal government will move the market and make them a few bucks. While many look at this as a new way of investing, it is really the oldest form of it there is. It’s hard to imagine today but there was a period of time before the stock markets existed. How did people invest before they could find and check stock performances in the newspaper? Quite simply, people invested in their community, with people they knew and in brick and mortar ideas they could see come to fruition, or not. That’s very much where we find ourselves today in the exempt market, people raising money locally for local deals.
The word private has many connotations. When it comes to access to a good or service, it’s generally coupled with an assumption of being reserved for the select few, the wealthy, the powerful; when it comes to investments that has very much been the case in Canada over the course of history. Private investments, or Exempt Market securities (as those in the industry call them) have generally been reserved for those with sky high incomes or net worth, leaving the 99 percent to fend for themselves in our current world of underperforming mutual funds, high frequency trading, inflated IPO’s and historically low interest rates. Having said that, thanks to the dedication of a relatively small group intent on challenging the status quo, a movement is underway that is seeing these private opportunities become available to the masses. Truth be told, regulations have allowed everyday Canadians to access to private investments for decades but it was a portion of the regulatory rulebook that was hardly used. The tools allowing entrepreneurs to raise capital without going public and allowing investors to get in at the ground level are a well-kept secret that is just starting to get out.
What is often seen as the Achilles’ heel of private investments is what now sees people flocking to them, a lack of liquidity, or better put…shelter from market risk. While it is not for everyone, many investors are starting to consider trading in the liquidity provided in the public markets in exchange for the possibility of higher yields and shelter from the market risk tied to the liquidity they once craved. Prior to the great meltdown of 2008, investors were led to believe that the liquidity provided by the markets was their safety net. If they needed out, they could get out on a moments notice. Not unlike any other evacuation though, the mass exodus of the markets saw many people get hurt. The safety net had holes and people fell through.
Whether the democratized world of private investments is the highly sought after solution to the ongoing ailments of the capital markets remains to be seen, but one way or another we’re soon to find out. Despite an uphill battle due to past shortcomings, misinformation, and the noise of naysayers, the exempt market should continue to grow so long as those who earn a living in this space remember what most on Wall and Bay Street seem to have long since forgotten, whose opinion matters most, that of the investor.
FROM THE AUTHOR:
The Canadian Gold Rush Is Back!! How to Accelerate Your Wealth Outside the Stock Market is the first book written, dedicated exclusively to educating investors on the Exempt Market today. As a private market specialist with Pinnacle Wealth Brokers, I found that most qualified investors were unaware of what the Exempt Market has available to accelerate their wealth; or even of its existence.
For the most part, the largest percentage of potential investors are uninformed on the alternatives they have to traditional investing vehicles, and the banks or their usual financial sources are not about to tell them. Those that do know that the private market is out there may not be educated about the changes in the industry to protect the investor. They want proof that this is real and not too good to be true.
Investors need to be informed that there are now EMDs who do the stringent due diligence on the issuers. They assess the financials and abilities of the principals to be able to bring the investment to a positive financial outcome, which provides them the highest quality investments to choose from.
The process needs to be broken down into simple terms that make sense for those who think anything over a 2% return is not legitimately attainable. Investors need to be provided knowledge on the multiple options of terms, payouts, high returns, and asset classes in Cash or registered accounts that they can orchestrate to fit their individual needs.
Trust, credibility and visibility must be built on a massive and efficient scale, not on a touch by touch basis. It is time for the Exempt Market to walk out into the light!