Two years ago, it was more than apparent to any investor that Facebook would be a great investment. Luckily there is a secondary market to trade stock in non public companies. Companies like Facebook have been on that secondary market for years now. Anyone can go there, and with the company’s approval, buy stock.
Oh, there is one tiny catch. In order to buy any Facebook stock, you need a minimum of $2,000,000. That’s no problem, right? Everyone not on Wall Street has that in their sock drawer. Not quite. Basically, that secondary market is there to help make Wall Street richer. Not our clients, but us.
Over the past two years, I have personally sat down with over 10 different investment houses to buy some Facebook stock for myself before it goes public. Each one has demanded that I turn over all the assets I currently have in investments over to them. They would not give any consideration to someone who wasn’t already on their client list.
As I said in the prior Facebook IPO post, this is a great long term investment. Even some of the biggest players on Wall Street are having trouble getting their hands on it before Facebook goes public. Why? Because firms are only selling shares to the biggest fish they have to keep them happy. The big fish pay more in fees over the year. Why would Wall Street help a single mom with two kids scraping by, when we can help a billionaire who pays millions in management fees each year. Seems fair, doesn’t it?