Do you want to understand how to consistently earn double digit and triple digit returns from stocks? The clear answer lies in information technology. Yes. Information technology.
A lot of the stocks I’ve owned which have earned more than 50% returns within just a year are not even on the radar screens of the analysts of major investment firms. Just how do I know? Because I’ve worked at two Fortune 500 financial services firms as a Private Banker and Private Wealth Manager and never was able to find any research at these firms on the stocks that interested me the most. Why?IT-Dienstleister Düsseldorf
Because the best way to make money in investing has changed dramatically and the big investment firms haven’t kept up. One of the reasons big investment firms haven’t kept up is basically because most have ulterior motives as pure marketing machines. Virtually every manager at every large investment firm is compensated how much fee income and profit their office creates the firm, not how well their financial consultants have performed for their clients. There’s a big difference between both of these goals. It’s exactly why former Merrill Lynch star internet analyst Henry Blodgett once stated in a remark he never believed would be made public, that the stocks other Merrill analysts were praising on TV as top picks were “crap” and “junk” (Source: Fort Worth Star Telegram, May 26, 2002).
Even honest financial consultants at big investment firms find it too difficult to locate you great opportunities among the pool of stocks that their firm tracks. Why? Because many firms mandate older age and a lot of experience as prerequisites for their star analysts. They believe that a head industry analyst with a few grey hairs is much more credible when appearing before their top clients and before the American public on television. Personally, if I ran an investment firm, each one of my analysts could possibly be under 30 years of age. Why?
Well, information technology has revolutionized the power of analysts to locate stocks with spectacular growth prospects before the general public becomes aware of those stocks. Leads is found through internet search engines by searching the right keywords, and also through other creative methods, such as the usage of blogs. Often, the most effective stock opportunities may be uncovered through non-traditional sourced elements of information, meaning NOT Reuters, NOT Bloomberg, and NOT some of the other financial information clearinghouses that big wall street firms pay 1000s of dollars for every month. Often, the most effective information is free and online, but the important thing is knowing how to uncover it.
Typically, when you have a challenge you want to solve related to the net, whether it’s a net design problem, a problem with obtaining better search engine rankings for your website, setting up a website, being able to learn how to search online databases, and so on, could you turn to a fresh faced kid or someone with grey hair for help? A brand new faced kid, right? Because typically younger generation is a lot more up-to-date on newer technology, including knowing how to manipulate and find data. See where I’m choosing all of this now?
The main reason you’ll never hear about the businesses that in five years will be the new Microsofts and the brand new Dells from the portfolio managers and financial consultants at large financial services firms is basically because huge financial institutions have yet to understand that understanding how to source information utilizing information technology is what’s enabled the most effective stock pickers to be right so often times about stocks nobody else has heard of. And don’t be impressed if your financial consultant recommended IPO plays like Google that skyrocketed because depends upon knew about Google. Your financial consultant should be uncovering the tens and tens of other Googles out there that nobody else has heard of.
Frankly, I really could care less about how often times the top portfolio managers of big investment houses look at the companies of stocks they recommend. I really could care less if these top portfolio managers have “access” to the CEOs and CFOs of those companies because of their “reputation” ;.I really could care less concerning the “global reach” of those investment firms that permits them to analyze overseas companies. None with this impresses me as a client.
I really could care less because nearly all time, the big financial services firms are not researching the right companies. By this, I mean the little and micro cap stocks that nobody has heard of. The big firms will spend thousands of dollars to create these conferences at fancy hotels for their biggest clients and parade their impressive usage of big time company CEOs, but still, I’d rather spend almost nothing continuing to discover stocks that will give me 50% returns within just a year versus wasting my time listening to excessive information regarding a huge company that will never grow more than 8% a year. But then again, that’s just my opinion.