Fear the talking heads...
“Why The Media, Brokers & Big Time Investors Are LYING to you...”
Traders, Investors & Market Watchers:
This article might shock you a bit so I suggest grabbing a tasty scone because scones go great with a nice tall glass of truth.
Ladies and gentlemen... We live in a world that just ain't fair.
There's people with a lot of money (over $5 million in the bank) and then there's... The rest of us...
I can't tell you how many trading books that I've read that begin with "you need at least $50,000-$100,000 to start trading effectively in the stock market. - Bro, if I had that kind of money when I started out, I wouldn't be reading a book on investing...
What about the "losers" like us?... The ones who weren't fed with a silver spoon from birth? How do we make money? - I once asked a junior hedge fund investor that very question and you know what he told me? To: "save every penny and one day you'd have the money." - In what world do these people live in?
The big guys play the long game, confidently stating that dividends and steady gains over the course of 20 years is the path to financial success.
If I hear one more talking head on CNBC say that if you "hold a stock for 20 years then you are guaranteed to beat the market" I will lose my mind. - Yeah, tell that to the thousands of investors using shares of Enron as toilet paper today.
To be fair, statistically, they aren't wrong. - And this is why they are so devastating to smaller investors...
As stated in why small cap stocks the major difference between big investors and small investors, obviously, is the amount of money that they have to invest with. This financial disparity leads to the necessity for vastly different trading styles, however, said big investors disparage effective small portfolio investing strategies, stating that they are "risky" and "unpredicatable."
They delegitimize small caps by making them synonymous with the "wild west" OTC, penny stocks and pink sheets, saying that 95%-99% of them are "garbage" so why even look for the good ones? - Not only is that wrong but they fail to mention that a lot of these "garbage" stocks trade on the Nasdaq & NYSE two of the most legitimate stock exchanges in the world.
Because of their financial ignorance, they easily write off anyone consistently making money with small caps as either merely lucky or worse, liars.
For every article saying that small caps are where the money is made, there are 100 articles saying that it's all a "scam" and to buy big cap stocks like they do.
They fail to see the extreme profit in some of them because their metrics don't work to pick up on the subtle nuance of small caps.
If you want further understanding between the differences of big caps and small caps, read "The Lean Startup" by Eric Ries. An excellent read for entrepreneurs and ties in closely with why big investors don't feel safe with bets on these small companies.
To a hedgefund manager who's spent his life focusing on big caps, startups all look like chaotic messes. - "Their working out of their garage? - That's nuts!" said early opt outers of Apple and Microsoft.
What looks like chaos to the old investor, is adaptation, change, learning, progress, R&D and evolution to the savvy new investor.
Furthering the divide between wealthy investors and ones with smaller portfolios, they've spent BILLIONS on how to "predict" the market and use indicators to make the most out of their trades.
The big problem with these indicators is that THEY ONLY WORK FOR BIG CAP STOCKS because their indicators need years of market and technical data to predict where the stock is going next. How can these indicators predict what a Medical Marijuana play is going to do next year when the company's data is based on when the laws were more strict on selling their product?
The Bottom Line: They are able to utilize their deep pockets to take advantage of small percentages, like dividends, that seriously add up over time. This style of investing is ineffective for anyone starting out with less than $50,000.
Usually, these guys trade in quantities of over $1 million dollars. This financial power highly influences the way they trade. - With that kind of cash, a million dollar investment into Coca-Cola (KO), which has a dividend yield of 3.37%, automatically gets $33,700 per year just for owning the stock. Awesome deal right? Not if you don't have $1 million bucks lying around... - Let's do the same math except instead of investing $1 million, you invest $1,000 (or 1/3rd of my total initial portfolio back in 2007.) 3.37% of $1,000 is....... just $33.7 dollars per year!
Here's where it gets particularly nasty...
Most people are starting to catch on to the fact that there is zero accountability with the media these days. However, it's even worse when it comes to stocks. Talking heads can literally say whatever they're told to say so they can keep their jobs. No one's keeping track of their winners and losers. - They have automatic authority because they are on television.
Do you think our newsletter isn't accountable for our losses? If we lose, our tiny subscriber list will quickly lose faith in our picks. We are only as good as our last pick and we wouldn't have it any other way because it forces us to do the work; to make winning picks time and time again. - That's the way it should be! We work for YOU, not the other way around.
You cannot trust the talking heads on television or the ones that propagate on the big financial news sites because they could have been influenced, financially or otherwise, to tell their viewers to buy or sell a particular stock.
Just watch Fox Business, MSNBC or CNBC. They're supposed to be unbiased news sources "fair and balanced." - Does anything that these "unbiased media sources" state sound even remotely unbiased? - Why would it be any different when it came to stocks?
I learned very early on not to trust these sources as accurate. The only thing that can be trusted is raw data. - News straight from the CEO's mouth. Letters to the shareholders. News released by the company. - The company is held accountable by the SEC and FBI and are legally obligated to keep their shareholders and the public in the know on all recent information both positive AND negative. That's the very meaning of being a publically traded company. And, with the acception of a few bad apples, the vast majority of companies abide by this law. - THIS is the only information that you can confidently trust and it is the ONLY information that we send to our members..
Now that was certainly a nice tall glass of truth and even though it's just the tip of the iceberg, after reading the unfiltered lines that I just wrote, I cannot help but get the feeling that I'm starting to sound like one of those tin foil hat wearing conspiracy theorists haha - so maybe its time for me to switch drinks to a cup of calm the heck down...
If you haven't subscribed yet, what are you waiting for?. It's free... And remember, we are held accountable to YOU - give it a try :)
I mean, at the very least, have a chuckle my old school
Either way, thanks for reading.
1) Small cap stocks? Don’t you mean penny stocks?
Not usually, Mr. skeptic. – Small cap stocks are usually not penny stocks. Small cap stocks are just stocks with a relatively small market cap (between $300mil and $1bil) where as penny stocks usually only trade on the OTC with a much lower share price. About half of the stocks that we focus on are traded on the big boy markets (Nasdaq and NYSE) and another large chunk of OTCs that we follow are actually traded on other reputable exchanges, like the TSX (Toronto Stock Exchange) but also have an OTC ticker so Americans can buy shares of their company as well.
2) What sectors should I focus on?
Oh boy, that varies month to month… Since the elections, we’ve been focusing on biotechs, which have gotten a massive boost from the surprise Trump victory. However, it wasn’t too long ago that we were seeing massive returns from Medical Marijuana stocks And before that, it was Gold and precious metals. This is why we suggest subscribing to our newsletter so you'll know which sector is hot.
3) Do I need a traditional stockbroker to trade these stocks?
Absolutely not! – Just sign up for an online account over at Optionshouse.com by clicking on this awesome deal here: Trade Free For 60 Days When you Open a New IRA Account with OptionsHouse! and trade them over there.
4) Do you trade the stocks that you send to us over email?
Absolutely not! – That would be insider trading and if anyone were despicable enough to do that, then the SEC would rightfully investigate him or her faster than you could say Bugatti Chiron. Our newsletter is simply a free stock market news and information service.
5) I didn’t read any of this — can you sum up what you said?
Sure: make great trades and you can’t lose.