How to 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 earnings, cash flow, or book value. 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 Weekend] How to Turn Yourself Into a 'Make Money' Investor By Whitney Tilson --------------------------------------------------------------- [Three Steps You Can Take to Protect Yourself]( Top business journalist Herb Greenberg exposes the dangerous "money pivot" ahead... along with three essential steps you can take to protect yourself. [Discover details here](... --------------------------------------------------------------- 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 earnings, cash flow, or book value. 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 that the cheap stocks were usually cheap for a reason... because the underlying businesses were lousy. 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 their stocks don't appear cheap. - Selling great businesses too soon because their stock prices seem "too high." - Failing to understand and appreciate powerful new technologies and trends. I'll confess – despite all of my successes during my more than two decades in the markets, 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, the inverse 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 their stocks and fail to sell when they should. - They get sucked into "story stocks" in the hottest, most over-hyped sectors where expectations are way out of line with the fundamentals. --------------------------------------------------------------- Recommended Link: [Elon's Prophecy: 'Civilization will crumble without more [of this mystery asset]']( Billionaire visionary Elon Musk predicts "civilization will crumble" without more of this mystery asset. It's not lithium. It's not copper or gold. And it's already attracting huge investments from Wall Street billionaires – [click here to find out what it is](. --------------------------------------------------------------- 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% 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. That's why I changed my approach... Today, rather than being a classic value investor, I call myself a "make money" investor – meaning that I try to combine the best of value and growth investing. It's the best way to capture the upside – and avoid the common pitfalls – of both styles of investing. 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. Right now, I see an incredible investment opportunity ahead... Some of America's billionaires have established massive positions ahead of this event. Already, Warren Buffett has poured $34 billion into this sector. Jeremy Grantham has invested $3.1 billion... Steven Cohen has bet $2.2 billion... and Ray Dalio, David Tepper, and Paul Tudor Jones have pushed in a collective $1.1 billion into this corner of the market. In fact, this event is so rare that one of this kind has happened only four other times in the past 123 years. And now it looks like it could happen again – for a fifth and possibly final time. At its peak, this event could hand out massive returns as high as 10 times every dollar... And yet, millions of regular investors don't see it coming. In a brand-new presentation, I share all the details – [watch it here](. Best regards, Whitney Tilson --------------------------------------------------------------- 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](. © 2023 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 1125 N. Charles Street, Baltimore, Maryland 21201 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](