In This Issue:
- How to Invest in Private Markets
- ETF Talk: The Fund Built for ‘Adapting to Win’
- The Dickensian Market of 2026
- It’s Not Your Business
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How to Invest in Private Markets |
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How to Invest in Private Markets
There’s been a lot of noise about “private markets” of late, and most of it hasn’t really been very positive. That’s unfortunate, in my view, because the recent “private credit” concerns and the heightened scrutiny in the sector due to rising defaults and liquidity pressure is much more of a concentrated event for the big private credit firms such as Blue Owl, Ares Management and Apollo Global. That concern is not there for most private capital markets, however, and especially the ones that we, as individual investors, can allocate to as a complementary component supporting our overall investing goals.
To make clear what I mean about private capital markets, and to give you an accurate sense of what these markets actually are, I am going to elicit the help of my friend, university professor and long-time private capital markets investor, Dr. Paul M. Wendee.
Over the past several years, I’ve had the privilege of guest lecturing each semester to Dr. Wendee’s classes at Cal State Los Angeles and California Baptist University (CBU), so I can vouch for his skills as an educator. I can also vouch for his skills and knowledge of the private markets, as we’ve been judges of the FreedomFest “Pitch Tank” competition for the past several years, so I’ve seen his sharp, Kevin O’Leary-style wit in action.
Fortunately, all of us can now read up on just how to invest in private capital markets, as Dr. Wendee has just published his new book, The Intrinsic Value Wealth Report Pocket Guide to Private Capital Markets: The Complete Guide to Investing in Venture Capital, Angel & Early-Stage Companies, Alternative Investments, and Crowdfunding.
The following is an excerpt from this book, with, of course, permission from Dr. Wendee.
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Private capital markets, also known as private markets or PCM, are investment venues for buying and selling equity or debt in non-publicly traded companies. They provide capital for growth, buyouts or infrastructure, serving as an alternative to public stock and bond exchanges, often offering higher potential returns and diversification for institutional investors, high net worth investors and now, with the growing popularity of equity crowdfunding, everyday investors that don’t have accredited investor status, but still want to participate in the potentially higher returns of private markets. Many private investments also give investors access to companies before they go public, where much of the value creation happens.
Asset classes in the private capital markets also include, in addition to private equity and venture capital, private debt (direct lending), real assets (real estate, infrastructure), crowdfunding and other nonpublic securities. Nonpublic securities are asset classes that are not registered with the SEC and not traded on public exchanges like the New York Stock Exchange, the American Exchange and the Nasdaq, thus requiring private placement to investors. These investments are typically illiquid, less heavily regulated than public markets and do not require public disclosure of financial results.
Your editor (right) with Dr. Paul Wendee during a recent lecture at CBU.
As mentioned, the private capital markets offer the potential for substantially higher returns. Top-tier private equity and venture capital funds have historically outperformed public markets. Private investments also often have low correlation with traditional assets like stocks and bonds, thereby potentially reducing the overall risk of a portfolio consisting of stocks, bonds, cash and private market investments. So, it’s the higher return potential, along with the low correlation nature of private capital markets, that make them particularly appealing to investors of all types.
The private capital markets are one of the few areas where persistent alpha (excess return) is still achievable due to the unique combination of market “inefficiency,” i.e., less analyst coverage leading to more pricing inefficiencies; information asymmetry, i.e., skilled investors gain an edge over the competition and active value creation, where investors can directly influence corporate operations, not just stock price.
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We will be exploring the private capital markets in future articles and special reports specifically focused on opportunities for subscribers to my Forecasts & Strategies newsletter advisory service and other services. So, definitely stay tuned for more on this subject.
The way I see it, the more investing tools you know how to use, the better investor you’ll become. And even if you don’t invest in private capital markets, knowing how they work and knowing how most public companies started their lives is invaluable knowledge that can only enhance your investing acumen.
Finally, I highly recommend Dr. Paul Wendee’s new book, The Intrinsic Value Wealth Report Pocket Guide to Private Capital Markets: The Complete Guide to Investing in Venture Capital, Angel & Early-Stage Companies, Alternative Investments, and Crowdfunding, which is available now for immediate download. |
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The ‘Met Gala’ of Liberty
“Jim, I like your idea of celebrating ‘Capitalist Day,’ but how do you actually do that?”
--Marvin, Clearwater, FL.
Glad you asked, Marvin. You can celebrate Capitalist Day anytime, anywhere, informally and with every purchasing decision you make. But, if you want to celebrate in grand fashion, like “Met Gala” style, then you have to gather in one place with fellow free-market revelers. Fortunately, there is such an event, and it takes place in Sin City in just over two months!
That Met Gala of liberty is FreedomFest, the largest gathering of free minds in the world. This year’s theme is “Think Independent,” a clever play-on-words linked to America’s 250th Independence Day celebration. FreedomFest takes place July 8-11, at Caesar’s Palace in Las Vegas.
Today, I invite you to join me and my Eagle Financial Publications colleague George Gilder, along with fellow liberty heroes Steve Forbes, Kennedy, Adam Corolla, Sen. Rand Paul and his wife Kelley Paul, Glenn Beck and of course, liberty’s pre-eminent power couple, Mark and Jo Ann Skousen.
Use code EAGLE100 to get $100 off the registration fee. For full information on all speakers and topics, and to register, go to FreedomFest 2026. Think Independent. - FreedomFest.
If you are a Jim Woods’ Winners Circle member, you get $200 off the conference price, so don’t wait. Book your freedom celebration, today!
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ETF Talk: The Fund Built for ‘Adapting to Win’
“Adaptability is about the powerful difference between adapting to cope and adapting to win.”
--Max McKeown
The recent U.S.-Iran conflict introduced a wave of uncertainty into the market, igniting fears around oil supply disruptions, inflation pressure and broader geopolitical instability.
This turmoil contributed to the tech sector’s plummet earlier in the year. However, as tensions have begun to ease somewhat, interest has started shifting back to long-term strategies, causing some tech stocks to quickly regain momentum.
The distinction between adapting to cope and adapting to win is important in situations such as this one, in which sudden market twists reward proactive positioning over delayed reactions. Investors open to entering the tech sector through a less-conventional approach may want to look at the exchange-traded fund (ETF) of the week, the ARK Blockchain & Fintech Innovation ETF (ARKF).
ARKF reflects an “adapt to win” philosophy through active management, selecting companies positioned to reshape financial infrastructure rather than tracking a passive index. It actively composes and rebalances its portfolio around themes of “Blockchain and Fintech innovation,” which ARK Invest describes as products or services that technologically innovate the financial sector.
The fund seeks long-term growth of capital by investing at least 80% of its assets, under normal circumstances, into domestic and foreign securities that engage with this theme. Examples of such applications include transaction and payment innovation, blockchain technology, new digital platforms and emerging financial intermediaries.
ARKF has net assets of $827.52 million and an expense ratio of 0.75%. Its top 10 holdings constitute approximately 54.11% of its portfolio and include Shopify Inc. (NASDAQ: SHOP), 7.89%; Circle Internet Group (NYSE: CRCL), 7.39%; ARK 21Shares Bitcoin ETF (CBOE: ARKB), 6.76%; Coinbase Global, Inc. (NASDAQ: COIN), 6.36%; Block, Inc. (NYSE: XYZ), 5.35%; Robinhood Markets, Inc. (NASDAQ: HOOD), 4.73%; Palantir Technologies Inc. (NASDAQ: PLTR), 4.05%; Bullish (NYSE: BLSH), 3.98%; Amazon.com, Inc. (NASDAQ: AMZN), 3.82% and Advanced Micro Devices, Inc. (NASDAQ: AMD), 3.78%.
Chart courtesy of www.stockcharts.com.
Now, it is important to note here that investing in the fintech space is not without significant risk. As illustrated in the above chart, ARKF has experienced considerably large price swings over the past year. The fund is up 8.54% in the last month but has slid 4.68% over the last three months and 13.62% year to date, while still maintaining a 14.43% gain over the last year.
This volatility reflects the nature of the fund’s strategy. As discussed earlier, ARKF is designed with a long-term growth focus, meaning short-term performance can be unpredictable and, at times, turbulent. Investors should keep this in mind before deciding to allocate capital to the fund and consider whether it works well with their personal investing goals and time horizon.
However, for those comfortable with a more unconventional, innovation-focused approach, the current environment may present an interesting entry point. With ARKF trading below prior highs, the fund’s recent weakness could be viewed as an opportunity to gain exposure to potential long-term growth at a cheaper starting point. But don’t just take my word for it. Investors should always do their due diligence and research before adding any stock, fund or ETF to their portfolio.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.
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In case you missed it…
The Dickensian Market of 2026
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of Darkness, it was the spring of hope, it was the winter of despair.”
-- Charles Dickens, “A Tale of Two Cities”
In his 1859 classic, Charles Dickens taught us all about “A Tale of Two Cities.” The novel is set against the backdrop of extreme social contradictions, hence the classic opening sentence (perhaps the most famous opening sentence in literature) involving the diametric opposites of best/worst, wisdom/foolishness, belief/incredulity, light/darkness and hope/despair.
While Dickens illuminated us to these contradictions in the novel, if he were to write about the contradictions in stocks through the first four months of 2026, he may have appropriately titled this tome… “A Tale of Three Markets.”
Because of the unique events in what has been an unpredictable and quite volatile 2026, we’ve seen some distinct and substantive periodic performance disparities in stocks. I bring this to your attention, because observing sector and factor performance during those markets can help shape the outlook for what market segments are likely to outperform for the remainder of the year.
Big thanks to my colleagues at Sevens Report Research for digging through the data here, and for identifying the “three” distinct markets of the first third of 2026. Let’s start with the first market period, which we call the “Great Rotation” market. This market period lasted basically from the start of the year until Feb. 27, which was the day before the U.S./Iran war started. The Great Rotation market was characterized by expected elevated inflation and a “run-hot” economy of solid growth and looming rate cuts.
This confluence of factors increased demand for natural resources, and that prompted the smart money to do what it always does, and that is migrate to where it gets treated best. That translated into a rotation away from high-beta technology stocks, and into the relative value and more cyclical exposure of the broader market. From a factor standpoint, value (Vanguard Value ETF (VTV) +8.5%) massively outperformed growth (Vanguard Growth ETF (VUG) -5.5%), small caps outperformed large caps and low volatility outperformed high beta.
The Great Rotation market also saw the rise of what I call “artificial intelligence (AI) anxiety,” and the emergence of private credit worries, which weighed on former sector leaders, financials and technology. Sector outperformers during this period included energy, materials, consumer staples and industrials, while sector laggards focused on the aforementioned financials and tech, as well as consumer discretionary.
The second market of 2026 is what we call the “War” market. This market lasted from approximately Feb. 27 until March 30, and it was defined nearly entirely by the U.S./Iran war and the concomitant spiking oil prices, along with fears of a global supply chain disruption and a spike in energy prices that would slow growth and boost global inflation, which would choke off economic growth and lead to a stagflation scenario.
The War market prompted heavy risk-off money flows and commodity outperformance, as spiking resource prices benefited those sectors. The main outperformer here was energy (Energy SPDR (XLE) +11.5%), and while utilities and financials experienced modest declines, these sectors relatively outperformed the broad market.
Laggards during the War market were industrials (Industrials SPDR (XLI) -11.3%), which fell on fears of contracting economic growth, healthcare, which dropped on fears of supply chain disruptions and compressed margins, and consumer discretionary, which declined on worries that higher gasoline prices would reduce discretionary spending. From a factor standpoint, large caps, low volatility and value outperformed, while small caps, high beta and growth lagged.
In effect, this mostly created the opposite performance from before the war started, as expectations for solid economic growth and broadening earnings growth were undone by spiking oil and geopolitical uncertainty.
The final chapter in our tale of three markets began approximately on March 30 and has continued to the present, which we will call the “Chase” market. This situation has been defined by a sharp decline in geopolitical concerns. This decline, which was largely caused by social media posts from President Trump regarding a ceasefire in the war with Iran, resulted in a frantic chase into markets by investors who had positioned for the worst outcome that, thankfully (and at least so far), hasn’t arrived.
The Chase market witnessed investors rushing into mega-cap tech stocks and other high-beta, momentum segments, and that has led to 2025-like performance characteristics. On a sector level, tech handily outperformed, while consumer discretionary also outperformed, albeit modestly. Laggards included energy, which fell on lower oil prices, and defensive sectors, as fears of a war-driven economic slowdown receded.
From a factor standpoint, it was similar to 2025, as growth outperformed (VUG +18.6%) value (VTV +5.1%) on that rush to add exposure. The chart below reveals the March decline and subsequent April surge in the growth versus value factors.
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So, now we get to the forecast, which is to assess which of these three market tales is most likely to play out going forward.
Perhaps the easiest market to rule out here (although it will continue churning under the surface) is a return to War market. We say that for the simple reason that the war is unlikely to fulfill the worst-case scenarios of sending oil to $200 per barrel, or massively expanding the conflict throughout the Gulf states, an expansion that would cause a lasting wave of stagflation across the U.S. and global economy. Fortunately, it does not look like the war is going to escalate materially regardless of how botched and choppy the ceasefire process becomes.
That leaves us with a continuation of the Chase market currently in effect, or a return to the pre-war Great Rotation market that defined much of the fourth quarter of 2025 and the first quarter of 2026.
Of the two candidates, I suspect the one with the highest probability of outcome is a return to the Great Rotation. My reasons for choosing this outcome are twofold.
First, the defining characteristic of the current Chase rally has been the race to regain market exposure. For nearly a decade, mega-cap tech stocks such as the Magnificent Seven have actually taken on a more defensive role, as smart money investors have used these stocks to, in effect, “rent exposure,” as these stocks have mostly been immune to changes in economic growth and geopolitical risks.
However, with the S&P 500 at all-time highs, and some sentiment and momentum indicators getting close to extended levels, it certainly seems as though much of the chasing that’s propelled tech has run its course.
Second, if the status quo of elevated oil prices but still-strong growth holds, that’s a run-hot economy that should benefit the ETFs and sectors that outperformed in the first market of 2026, including many of our holdings in the natural resources and energy sectors, as well as in the materials and industrials sector. Value should outperform growth here, and low volatility should outperform high beta and small caps.
One caveat here is that we do not expect the massive outperformance of value versus growth factors, and cyclical sectors over tech like we saw in the Great Rotation market that started the year. The reason for this is that uncertain market environments usually cause demand for the familiar, and the familiar in this market means mega-cap tech stocks.
Fortunately, or perhaps more accurately, presciently, the portfolios in my Forecasts & Strategies newsletter advisory service are positioned to take advantage of both a Great Rotation market and a Chase market.
As we move towards a potential “new normal” environment of solid economic growth, elevated inflation, elevated energy prices but still-strong corporate earnings, cyclicals, value and mega-cap tech segments should reassert themselves as market leaders.
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It’s Not Your Business
“What other people think of you is not your business.”
--Origins unknown
It’s an old adage, but it’s one that I actually just recently discovered during a conversation with a friend struggling with acceptance issues. After wrestling with some professional problems of this sort, this man recalled that his mother used to tell him, “What other folk think about you is none of your damn business!” I love that, because it encourages self-acceptance and emphasizes that others’ opinions should never dictate your self-worth.
Over the years, I have come to realize that, try as we may to impress, we cannot control how others perceive us. People’s opinions are shaped by their own experiences, biases and perceptions, which may never reflect reality. So, the next time you are wondering what someone thinks of you, just remember that’s it’s not your business.
Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim. |
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In the name of the best within us,
Jim Woods
Editor, Investing Edge, Bullseye Stock Trader, and Crypto & Commodities Trader
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About Jim Woods:
 Jim Woods has more than 25 years experience in the markets, as a stock broker, hedge fund money manager, author, speaker and independent analyst. Today Jim serves as editor and investment director of the long-running newsletters Forecasts & Strategies, Bullseye Stock Trader, TNT Trader, Five Star Trader, and Tactical Trader, and a Live Coaching service offered exclusively to his readers.
His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, and many others. |
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