How Private Stock Can Help You Diversify

by Staff

Everyone knows that stock is, usually, bought from publicly traded companies. This stock is bought on a stock exchange using stock trading software. You can also invest in stock via a fund. Funds are made up of multiple stocks run by fund managers. You can usually invest in these at a bank or a financial institution like a hedge fund. However, there is another way to buy stock that can be quite appealing and also help diversify an investment portfolio: Private stock.


What Is Private Stock


Private stock is pretty straightforward. It’s the stock of a business that hasn’t yet gone public. This means they haven’t had an IPO on a respective stock exchange. An IPO stands for initial public offering and essentially is where a company first enters onto the stock market, thus going public. An IPO means the stock is offered to retail investors who will then buy the stock. IPOs are usually exciting times for the company and investors alike.


Private stock on the other hand is purchased through other means. Stock is often given as an incentive to employees and key investors at certain points of the project. Company owners might also decide to sell stock privately too. There are ways to acquire and buy private stock. Doing so, depending on the company, can be a good investment because the stock has yet to be exposed to the whims of the public stock market. It’s also a great way to buy in on a stock that you believe is going to do well.


Private Stock Example; Docker Stock


It’s easy to talk about private stock investments without looking at an example. Let’s take Docker stock. Docker is a provider of app development solutions designed to simplify and accelerate workflows with an integrated development pipeline and application components. The company has been up and down but since 2019 they’ve undergone two venture funding rounds and now the business is worth around $2billion. As you can see docker stock value would have fluctuated a little in that time but those who bought the private stock early on will be happy now.


Docker hasn’t even endorsed a plan to go public. They may in the future, but as it stands docker stock is only purchasable through private means. They’re in a good place and going in the right direction with their new CEO so this provides a unique example regarding how private stock can be a good investment, especially when you’re looking to invest in stock further but want something a little different than is typically offered on the stock exchange, private stock can provide it.


How To Buy Private Stock

There are multiple ways you can purchase private stock.  We’ve listed some of them down below.


  • Private Placement
  • Stock Reseller
  • Act as an angel investor
  • Approach stock owner directly


Some might appeal to you, while others might not. The mass investing route can obviously be quite troublesome because you don’t know exactly who you’re investing in. That’s the trouble you get when approaching certain combinator investment problems. Whereas investing directly is a lot better but you’ll have to sort out the paperwork yourself, which can be extensive. Stock resellers are often the best way to go providing you don’t mind paying a small fee. It’s worth it just to know everything has been handled properly.


So there you have it…private stock can be an excellent alternative if you’re looking to further explore stock investment. You just need to do your research and find the right stock, as well as ensuring you find a good medium through which to purchase it.

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The New Jersey Digest is a new jersey magazine that has chronicled daily life in the Garden State for over 10 years.

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