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Learn why individual stocks are never in style and why they might be right for you.
Have you checked out the Creating Wealth podcast yet with Jason Hartman? It’s full of amazing information and over 700 podcasts about real estate investing. If you like this podcast, you’ll like that one too.
If you’ve listened to me for a while, you know my story – that I was in the financial world working for money management firms. It was sacrilege to invest in stocks on your own. I did it any way and I turned a 5 figure investment into $2 million in several years.
When I first got into financial services, there were “stockbrokers” who picked stocks for you.
They had companies they built positions in and would put all of their clients in them. If it changed they would sell them all out of them.
I had a friend who was my mom’s age who was the secretary of the stock analysts. When they recommended stocks, she bought them for herself. She retired a multi-millionaire even though she had a modest salary.
The only way that is possible is by compounding at a high rate.
After the stock phase came the mutual fund phase. Instead of stockbrokers, they became “Financial Advisors” who placed your money with money managers (like the companies I represented). The FA’s became asset gatherers but didn’t manage the money themselves, they outsourced it and collected fees.
Today passive investing is the rage. ETF’s came into being because many professional managers were not outperforming the indexes, so ETF’s were created to mirror indexes. Investors no longer try to out-do the index.
This year the S & P is up 3.5% YTD. That’s it.
That’s all the return you’re getting in the S & P.
Small caps are outperforming. With the dollar so strong, it’s hard for multi-nationals to make money. Corporate profits have been declining for 3 quarters. Small companies might not have business outside the US so they aren’t impacted. Therefore their earnings are doing better. Small caps also do the best at the end of a bull market, this one being one of the longest in history.
Asset allocation becomes important. Where your money is invested matters most. It’s time to look at individual stocks again because I think you can do better than 3.5% YTD!
Not on your own, not by throwing darts, not by “buying what you know”, but by following earnings. Corporate earnings are the biggest determinant of a stock’s price.
IBD does the work for you and screens stocks through their funnel. If you haven’t heard podcast #195 about the 8th graders in St. Agnes’ school who picked stocks and got 25% in 2 years, you need to listen.
Peter Lynch wrote about them in his book. I have the portfolio on my website. When you look at what they owned in 1990, it was Disney, Nike – some great companies that you recognize today.
Success leaves clues and good companies are growing at high rates for a lot of years before they become blue chips.
Start learning about individual stocks. I’m going to be teaching about them because I think it’s a lost art, but one that is to worthwhile.
Did you hear about the stocks and the compounding rates in my last podcast? I mentioned:
Netflix 42%
Amazon 37%
Apple 28%
Nike 20%
Google 15%
Starbucks 14%
Get a current IBD and William J. O’Neil’s book off the Resources page on my website. Thank you.
It’s time to resurrect individual stock picking, but only with the right tools.
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