Ignore Growth and Value and Turn Yourself Into a 'Make Money' Investor

I had it backwards my whole career... For most of my time on Wall Street, I was an old-school value investor. That meant I dug through the "bargain bin" looking for stocks that traded at low multiples of their earnings or other key metrics. Of course, I cared about the quality and future growth prospects […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] Editor's note: Yesterday's essay contained a small error. Please see the corrected essay below. --------------------------------------------------------------- Ignore Growth and Value and Turn Yourself Into a 'Make Money' Investor By Whitney Tilson --------------------------------------------------------------- [Stunning Video Exposes What Our Country's Elite Are Up to]( If you're worried about red-hot inflation, interest rate hikes, and the stock market bloodbath. [You need to watch THIS](. --------------------------------------------------------------- I had it backwards my whole career... For most of my time on Wall Street, I was an old-school value investor. That meant I dug through the "bargain bin" looking for stocks that traded at low multiples of their earnings or other key metrics. Of course, I cared about the quality and future growth prospects of the companies I invested in, but to me, that part was secondary. The problem was, the cheap stocks were usually cheap for a reason... because the underlying businesses were crummy. So the seemingly cheap stocks turned out to be value traps – they just went down and down as the businesses declined. But a few years ago, I changed – and improved – my approach to investing and how I pick stocks... You see, falling for value traps is just one of the four mistakes that tend to plague classic value investors. The other three are: - Failing to buy high-quality businesses because they didn't look cheap at the time. - Selling great businesses too soon because their stock prices soared "too high." - Failing to understand and appreciate powerful new technologies and trends. I'll confess – despite all of my successes during my 20 years in the market, I've made every one of these errors. I want to emphasize, however, that the lesson here is not to just do the opposite and buy the stocks of great growth companies irrespective of valuation. Growth investors frequently make the following mistakes that are, in many ways, reflections of the ones value investors make: - They overestimate future growth, forgetting the powerful force of reversion to the mean. - They miss the impact of changing technology, new competitors, size acting as an anchor to growth, etc. Trees don't grow to the sky. - They pay too high a price for a stock, such that even if the business performs well, the stock doesn't. - They fall in love with great companies and fail to sell when they should. - They get sucked into "story stocks" – businesses full of excitement and promise where expectations grow way out of line with the fundamentals. The truth is that both quality and price matter... But they're not equally weighted. I estimate that 75% of what determines a stock's performance over time is how the company performs, and only 25% of it is the valuation at the time of purchase. Unfortunately, for my entire career I had this backwards: I looked among cheap stocks and tried to find good businesses, when I should have looked among good businesses to find reasonably priced stocks. --------------------------------------------------------------- Recommended Link: [This could literally save your retirement]( The man CNBC called "The Prophet" says he'd put 50% of his kid's college fund in this stock. [He reveals the name and the ticker symbol here](... --------------------------------------------------------------- That's why I changed my approach... Today, rather than a classic value investor, I call myself a "make money" investor – meaning that I try to combine the best of value and growth investing. I believe it's a great way to avoid the common pitfalls of both sides while investing in better businesses right from the start. So stop digging in the bargain bin. Instead, look for high-quality companies and wait until you can buy their stocks at a reasonable price. If you are smart, courageous, and patient, you will crush the market. Today, I've found an incredible investment opportunity in one of the most ignored corners of the market... I'm not the only one who's seeing this opportunity, either. This year alone, Warren Buffett has poured nearly $25 billion into this sector. Hedge fund titans David Tepper, Ray Dalio, Paul Singer, Carl Icahn, George Soros, and more are buying hand over fist, too. In short, this looks like it's setting up to be a once-in-a-decade chance to make hundreds of percent gains... helping you recoup any losses you've suffered over the past year... forget about rising interest rates and record inflation... and sleep well at night knowing you're positioning yourself alongside some of the greatest investors of all time. [To break down this opportunity, I'm hosting a special event tonight called the 2022 Exodus](. I've also invited one of my most trusted contacts on Wall Street to join me. I don't want to spoil the surprise, but he's one of the most politically incorrect, sought-after investors in my rolodex. Together, we'll explain why this is the perfect way to reposition your portfolio. And as a thank you, we'll even share the name of one of our favorite stocks – ticker symbol included – to profit from it. There's no credit card or phone number required to attend this event. All we ask is that you [reserve your seat by clicking here](. Regards, Whitney Tilson September 15, 2022 --------------------------------------------------------------- If someone forwarded you this e-mail and you would like to be added to the Empire Financial Daily e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2022 Empire Financial Research. All rights reserved. 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