By OBBM Network Editorial Staff

Derived from an episode of Economic War Room.

Imagine being able to buy a share of Apple for just $22 in 1980. For those who took the chance, the reward was immense: a return of over 3,000 times their initial investment. However, this opportunity is no longer available to ordinary Americans. The private market has become the primary driver of growth, and companies like SpaceX and Uber are staying private for longer, denying individual investors the chance to participate in their success.

The Rise of Private Markets

According to Kevin Freeman, host of the Economic War Room, the number of listed companies in the US has decreased, while the number of private companies has increased. This shift has resulted in a significant reduction in opportunities for ordinary investors to participate in the growth of successful companies. As Freeman notes, ‘A nation where only the wealthy can own the future is not the America we were handed.’

The consequences of this trend are far-reaching. The wealth gap between the rich and the poor is widening, and the ability of individuals to build wealth through investment is becoming increasingly limited. The fact that companies like SpaceX and Uber are staying private for longer means that only a select few have access to the most lucrative investment opportunities.

The Impact on Ordinary Investors

The impact of this trend on ordinary investors is significant. As Freeman points out, ‘The patient investor eventually did fine, but the early cream was long gone.’ This means that individual investors are missing out on the most substantial returns, which are now being captured by private investors and institutional players. The result is a system in which only the wealthy have access to the best investment opportunities, perpetuating a cycle of inequality.

Furthermore, the current system is not only unfair but also inefficient. As Freeman notes, ‘The law says they’re not sophisticated enough to even be offered these deals.’ This means that individual investors are being denied access to investment opportunities based on their net worth, rather than their ability to make informed investment decisions.

A Possible Solution

There is a potential solution to this problem. The Informed Investor Access Act, introduced by Congressman Troy Downing, aims to create a new path for individual investors to access private markets. The bill would allow investors to participate in private investments if they receive advice from a registered, qualified professional. This could help level the playing field and provide more opportunities for ordinary investors to build wealth.

Conclusion

The shift towards private markets has significant implications for the future of American capitalism. As the wealth gap between the rich and the poor continues to widen, it is essential to find solutions that promote greater equality and access to investment opportunities. The Informed Investor Access Act is a step in the right direction, but more needs to be done to address the underlying issues. Ultimately, the goal should be to create a system in which all investors have an equal chance to succeed, regardless of their net worth.

The full episode of Economic War Room is available on OBBM Network TV.