Ever wonder why it seems like the wealthy just keep getting wealthier? I've spent years covering financial markets, and I'll let you in on something that doesn't make headlines on CNBC: there are actually two stock markets in America. One for regular folks like you and me, and another—far more lucrative one—reserved exclusively for the already-rich.
Let me explain.
When most of us think about investing, we picture opening a Fidelity account or checking our 401(k) balances. Maybe buying some Tesla shares on Robinhood. That's the public market—democratic, regulated, transparent.
But parallel to this runs an entirely different financial ecosystem: the private markets. And holy cow, have they exploded. We're talking about a $7.3 trillion behemoth just in private equity alone. For perspective, that approaches Japan's entire GDP. Add in venture capital, private debt, and investments from sovereign wealth funds, and this shadow market rivals the public one.
The catch? You're probably not invited.
See, to participate in private markets, you typically need to be an "accredited investor"—financial-speak for "already loaded." That means either having a net worth exceeding $1 million (and no, your house doesn't count) or earning more than $200k annually.
It's a financial catch-22. You need money to access the investments that... create the most money.
I call this the "opportunity gap," and it's reshaping American capitalism in ways that should make us uncomfortable. If you're middle class, congratulations—you can buy Apple stock after it's already worth $3 trillion! If you're wealthy, you could've bought in when Apple was worth mere millions.
The difference isn't just substantial. It's life-changing.
Take Amazon. A $10,000 investment at its 1997 IPO would've turned into about $12 million today. Not too shabby! But that same $10,000 placed in Amazon's Series A round a year earlier? Try $20 million.
(And don't even get me started on what early employees with equity stakes ended up with. We're in generational wealth territory there.)
This pattern keeps repeating. Facebook, Uber, Airbnb—they all stayed private much longer than companies from previous generations, allowing already-wealthy private investors to capture massive value before ordinary investors got a chance to participate.
Look, this isn't just about missing out on a good thing. It has profound implications for wealth inequality. When the best-performing assets are legally restricted to the already-affluent, we've essentially created a self-perpetuating cycle of advantage.
It's like having two lanes on the wealth highway: the regular lane that plods along at 7% annual returns, and an express lane for the rich that zooms ahead at 20%+.
Why do we allow this? The original rationale made sense. After the 1929 crash, regulators wanted to protect ordinary folks from complex, risky investments they might not understand. Fair enough—nobody wants to see retirees betting their life savings on speculative ventures.
But the unintended consequence? We've built a system where wealth begets wealth by design.
There have been halfhearted attempts to democratize things. The JOBS Act of 2012 expanded some access through crowdfunding. Platforms like AngelList created vehicles for smaller investors. And pre-IPO secondary markets have emerged where employees can sell shares.
These are nice gestures, but... they're just tinkering at the edges. The velvet rope remains firmly in place, with regulatory bouncers ensuring only the "right people" get in.
This matters more than ever because companies now stay private much longer than they used to. In the '90s, companies typically went public around age 4. Today? The average is over 11 years. That means by the time companies hit the public markets where regular investors can participate, much of their explosive growth has already happened—and been captured by private investors.
I've been watching this play out in real time with AI startups. Companies like Anthropic, Mistral, and Cohere are raising billions at astronomical valuations, all in private markets. Regular investors can maybe buy Microsoft or Google stock for indirect exposure, but they can't directly invest in these potentially revolutionary companies.
Is there a solution? Perhaps. Some advocate updating the accredited investor definition to include people with relevant education or experience, not just wealth. Others suggest creating regulated vehicles giving ordinary investors access to diversified private market exposure.
But for now, this invitation-only stock market continues operating largely invisible to most Americans, yet increasingly crucial to understanding our economic system.
What we casually refer to as "the stock market" on financial news is increasingly just the final stage of a much longer company lifecycle—essentially the retirement home for businesses that have already experienced their most dramatic growth under private ownership.
So next time your buddy brags about their savvy investment in Apple or Amazon shares... well, you might wonder what opportunities they never even got to consider in the first place.
In the two-tier investment system we've created, some of the best opportunities remain strictly invitation-only. And your invitation probably got lost in the mail.
