Diversification vs. “Diworsification”: How Many Stocks Is Too Many?

“I own 300 stocks…”

That’s what a gentleman tells me as we share a bottle of scotch at the Total Wealth Symposium (our annual in-person event for our readers) this past February.

“300?” I say, after nearly spitting my drink out.

“Yes, 300.”

“I’m a little over that,” another person pipes up.

Not trying to sound insulting, I ask, “Do you think that’s too many?”

“Yes. But, I hear about this company and I invest a little. Then I hear about another company and put a little cash in it too. Then another…”

“And I just can’t sell some of these losers. I keep hoping they come back.”

I liked both of these men, but owning 300 stocks? My mind went to what the world’s greatest investors would think. And (don’t shoot the messenger), they would say it’s “insane.”

If that sounds harsh, don’t get mad at me.

Get mad at two of the greatest investors ever: Warren Buffett and the late Charlie Munger.

Warren Buffett stated: “Diversification is protection against ignorance. It makes little sense if you know what you are doing.”

He continued: “Very few people have gotten rich on their seventh best idea. But a lot of people have gotten rich with their best idea. So I would say for anyone working with normal capital who really knows the businesses they have gone into, six is plenty.”

Munger added: “People think that if they have a hundred stocks they’re investing more professionally than they are if they have four or five stocks. I regard that as insanity.”

So, yes, insane.

These two iconic investors live out this thesis. 65% of their Berkshire Hathaway stock portfolio is in just three stocks:

  • Apple: $180 billion (48% of assets).
  • Bank of America: $34 billion (9% of assets).
  • American Express: $27 billion (7% of assets).

The concentrated portfolio is one reason experts state that Berkshire Hathaway has doubled the annualized return of the stock market over the last six decades.

Another investment legend, Peter Lynch, said owning too many stocks is “Diworsification” in his book, One Up on Wall Street.

That’s ironic, as Lynch himself was a serial stock acquirer who often held more than 1,000 stocks in his fund!

But, with that said, surely four or six investments is too concentrated. After all, I am not as smart as Buffett or Munger, and … even Berkshire Hathaway does hold 36 other stocks.

Yet, we can all assume that 300 stocks, or 1,000, is too many.

But what is the right amount?

10?

25?

50?

The Magic Number…

We all know that owning multiple stocks cuts down on risk.

If you buy just one stock, you’re risking 100% of your portfolio. Even many “safe” stocks are subject to big, sudden drops.

Own two stocks, and you still have 50% portfolio risk in each position.

By the time you get to a portfolio of 10 stocks, things look better. One investment could get completely wiped out, but you might still see your overall portfolio surge ahead.

But take a look at the chart below…

It’s based on data from Burton Malkiel’s classic book, A Random Walk Down Wall Street.

It shows how adding stocks to a portfolio reduces the risk.

However, by the time a portfolio has 20 or so holdings, the incremental reductions in risk are very small.

That’s because when you own a portfolio of 25 equally weighted positions, one position represents just 4% of your portfolio.

If one position doubles, your portfolio goes up just 4%.

If it crashes, it goes down just 4%.

So, diversification works, at least in moderation.

Once you get past 20 to 30 positions, you’re essentially owning the market. After all, the widely followed Dow Jones Industrial Average is a 30-stock portfolio.

So, that magic number is about 25 to 30.

A Diversification Lesson I Learned from Charles Mizrahi

Look, I confess…

Throughout my career, I’ve been the insane idiot who “diworsified” way too many times.

A few years ago, I was talking to Charles Mizrahi about this very topic: How many stocks are too many?

This is the exercise he did with me…

Imagine for a moment that the stock market was the 500 companies in your local town.

If you invest in all 500 of them, you might do well. That is if your town is growing and the overall economy is doing well.

But I bet you could identify 5 to 10 companies that stand out and do much, much better.

Surely, one electrician is better than the other five. So, invest in that electrician’s business.

Surely, one retailer is more competent, harder working, and has a bigger vision than the other five retailers. Invest in that retailer’s business.

And surely, one homebuilder has a stronger reputation than the other five, so invest in that person.

You get the idea. After identifying the top 5 to 10 businesses, why invest in the other 490?

This exercise always helped me put things in perspective.

Charles talked about this a bit more in his interview with Mike Huckabee.

Charles Mizrahi and Mike Huckabee Miracle on Main St.

As You De-Diworsify, Don’t “Pull the Flowers”

Chances are, your portfolio has too many stocks in it.

It’s time to sell a few of them.

As you do, be careful not to “water the weeds and pull up the flowers.” (A quote I am stealing from Charles Mizrahi).

In other words, don’t sell your winners and invest more in your losers.

Losers tend to keep losing.

Winners tend to keep winning.

But I get that it can be challenging.

So, I’ll give you the same advice I gave to the two men I met at our Total Wealth Symposium.

Use our free Stock Power Rating tool located on our Money & Markets website.

The rating is simple.

The lower the rating, the weaker the stock is. Sell it.

The higher the rating, the stronger the stock is. Buy it (or add to your position).

Take Tesla, for example: It’s currently rated a 25 Bearish.

Green Zone Power Rating Tesla Bearish 25

It’s time to sell.

There’s no question about it. It’s as simple as that.

Another example is Nvidia: It’s currently rated a 74 Bullish.

It’s time to buy or to add to your existing position.

Green Zone Power Ratings Nvidia Bullish

Go ahead and check out this free stock rating tool here.

Plug in your portfolio’s positions. It will help you decide which stocks to sell and which ones to hold (or add more money to it).

Time to Concentrate on AI?

As you review your portfolio, be sure to look closely at your exposure to companies that are leading the way in artificial intelligence.

McKinsey and Company expect AI to add $22 trillion to our economy … every year … for the next six years.

That is a lot of money.

As shown, Nvidia is a great play for that trend.

But in his recent interview, Charles Mizrahi revealed an even more exciting opportunity in the AI market.

A company that scores an 80 with our Stock Power Rating system (better than Nvidia!), and you can invest as little as $5.

If you are going to buy one stock, this is that one stock.

Get all the details here, or watch the video below.

Charles Mizrahi AI Oppenheimer

Aaron James

CEO, Banyan Hill, Money & Markets

Diversification vs. “Diworsification”: How Many Stocks Is Too Many?

“I own 300 stocks…”

That’s what a gentleman tells me as we share a bottle of scotch at the Total Wealth Symposium (our annual in-person event for our readers) this past February.

“300?” I say, after nearly spitting my drink out.

“Yes, 300.”

“I’m a little over that,” another person pipes up.

Not trying to sound insulting, I ask, “Do you think that’s too many?”

“Yes. But, I hear about this company and I invest a little. Then I hear about another company and put a little cash in it too. Then another…”

“And I just can’t sell some of these losers. I keep hoping they come back.”

I liked both of these men, but owning 300 stocks? My mind went to what the world’s greatest investors would think. And (don’t shoot the messenger), they would say it’s “insane.”

If that sounds harsh, don’t get mad at me.

Get mad at two of the greatest investors ever: Warren Buffett and the late Charlie Munger.

Warren Buffett stated: “Diversification is protection against ignorance. It makes little sense if you know what you are doing.”

He continued: “Very few people have gotten rich on their seventh best idea. But a lot of people have gotten rich with their best idea. So I would say for anyone working with normal capital who really knows the businesses they have gone into, six is plenty.”

Munger added: “People think that if they have a hundred stocks they’re investing more professionally than they are if they have four or five stocks. I regard that as insanity.”

So, yes, insane.

These two iconic investors live out this thesis. 65% of their Berkshire Hathaway stock portfolio is in just three stocks:

  • Apple: $180 billion (48% of assets).
  • Bank of America: $34 billion (9% of assets).
  • American Express: $27 billion (7% of assets).

The concentrated portfolio is one reason experts state that Berkshire Hathaway has doubled the annualized return of the stock market over the last six decades.

Another investment legend, Peter Lynch, said owning too many stocks is “Diworsification” in his book, One Up on Wall Street.

That’s ironic, as Lynch himself was a serial stock acquirer who often held more than 1,000 stocks in his fund!

But, with that said, surely four or six investments is too concentrated. After all, I am not as smart as Buffett or Munger, and … even Berkshire Hathaway does hold 36 other stocks.

Yet, we can all assume that 300 stocks, or 1,000, is too many.

But what is the right amount?

10?

25?

50?

The Magic Number…

We all know that owning multiple stocks cuts down on risk.

If you buy just one stock, you’re risking 100% of your portfolio. Even many “safe” stocks are subject to big, sudden drops.

Own two stocks, and you still have 50% portfolio risk in each position.

By the time you get to a portfolio of 10 stocks, things look better. One investment could get completely wiped out, but you might still see your overall portfolio surge ahead.

But take a look at the chart below…

It’s based on data from Burton Malkiel’s classic book, A Random Walk Down Wall Street.

It shows how adding stocks to a portfolio reduces the risk.

However, by the time a portfolio has 20 or so holdings, the incremental reductions in risk are very small.

That’s because when you own a portfolio of 25 equally weighted positions, one position represents just 4% of your portfolio.

If one position doubles, your portfolio goes up just 4%.

If it crashes, it goes down just 4%.

So, diversification works, at least in moderation.

Once you get past 20 to 30 positions, you’re essentially owning the market. After all, the widely followed Dow Jones Industrial Average is a 30-stock portfolio.

So, that magic number is about 25 to 30.

A Diversification Lesson I Learned from Charles Mizrahi

Look, I confess…

Throughout my career, I’ve been the insane idiot who “diworsified” way too many times.

A few years ago, I was talking to Charles Mizrahi about this very topic: How many stocks are too many?

This is the exercise he did with me…

Imagine for a moment that the stock market was the 500 companies in your local town.

If you invest in all 500 of them, you might do well. That is if your town is growing and the overall economy is doing well.

But I bet you could identify 5 to 10 companies that stand out and do much, much better.

Surely, one electrician is better than the other five. So, invest in that electrician’s business.

Surely, one retailer is more competent, harder working, and has a bigger vision than the other five retailers. Invest in that retailer’s business.

And surely, one homebuilder has a stronger reputation than the other five, so invest in that person.

You get the idea. After identifying the top 5 to 10 businesses, why invest in the other 490?

This exercise always helped me put things in perspective.

Charles talked about this a bit more in his interview with Mike Huckabee.

Charles Mizrahi and Mike Huckabee Miracle on Main St.

As You De-Diworsify, Don’t “Pull the Flowers”

Chances are, your portfolio has too many stocks in it.

It’s time to sell a few of them.

As you do, be careful not to “water the weeds and pull up the flowers.” (A quote I am stealing from Charles Mizrahi).

In other words, don’t sell your winners and invest more in your losers.

Losers tend to keep losing.

Winners tend to keep winning.

But I get that it can be challenging.

So, I’ll give you the same advice I gave to the two men I met at our Total Wealth Symposium.

Use our free Stock Power Rating tool located on our Money & Markets website.

The rating is simple.

The lower the rating, the weaker the stock is. Sell it.

The higher the rating, the stronger the stock is. Buy it (or add to your position).

Take Tesla, for example: It’s currently rated a 25 Bearish.

Green Zone Power Rating Tesla Bearish 25

It’s time to sell.

There’s no question about it. It’s as simple as that.

Another example is Nvidia: It’s currently rated a 74 Bullish.

It’s time to buy or to add to your existing position.

Green Zone Power Ratings Nvidia Bullish

Go ahead and check out this free stock rating tool here.

Plug in your portfolio’s positions. It will help you decide which stocks to sell and which ones to hold (or add more money to it).

Time to Concentrate on AI?

As you review your portfolio, be sure to look closely at your exposure to companies that are leading the way in artificial intelligence.

McKinsey and Company expect AI to add $22 trillion to our economy … every year … for the next six years.

That is a lot of money.

As shown, Nvidia is a great play for that trend.

But in his recent interview, Charles Mizrahi revealed an even more exciting opportunity in the AI market.

A company that scores an 80 with our Stock Power Rating system (better than Nvidia!), and you can invest as little as $5.

If you are going to buy one stock, this is that one stock.

Get all the details here, or watch the video below.

Charles Mizrahi AI Oppenheimer

Aaron James

CEO, Banyan Hill, Money & Markets

Factor Investing: 6 Key Factors For Your Investing Success

In my trade, it’s practically a death sentence.

An affliction that creeps up insidiously…

Then — before you even realize what’s happening — it’s poisoned everything you’re doing.

You’ve probably heard of it too.

It’s called “analysis paralysis,” and it can be a nightmare for traders and investors.

After all, there are more than 6,000 tradable securities on the market. And there are more options, bonds, cryptocurrencies and niche investments than I could list out here.

We simply have so many opportunities to choose from these days, and as a result, it’s easy to get stuck in a loop of endless research and inaction.

Unfortunately, technology is only making this situation worse, too.

According to a recent study from Pew Research, the average American spends seven hours per day staring at screens. Seven hours! That’s nearly half our waking lives.

We’re taking in absolutely massive quantities of data, too.

Another study from USC Annenberg found that we’re taking in the equivalent of 174 newspapers worth of information every day.

That’s FIVE TIMES the amount of daily information you took in back in 1986.

Kind of like drinking from a firehose!

Most Americans don’t realize how detrimental this kind of overexposure can be. But it’s something I’m acutely aware of…

I’ve spent my entire career focusing on what’s called “factor investing,” developing specialized investing systems based on extensive research and analysis.

It’s the kind of investing that requires me to absorb as much information as possible—while still processing all that data into a profitable, repeatable strategy.

So we always have the temptation to soak up more data, to consider more opportunities.

But at the end of the day, it’s critical to stay focused on what really matters in investing: the profits.

Here’s how I do that…

6 Simple Factors for Investing Success

When I’m looking for my next great investment, I like to keep things simple.

That means I don’t fret over external factors like this year’s upcoming presidential election, whether bitcoin is trending or which blockbuster is top at the box office.

Instead, I focus on just six key factors:

  1. Momentum.
  2. Size.
  3. Volatility.
  4. Value.
  5. Quality.
  6. Growth.

That’s it.

I explained each of these factors at length in an interview with my Managing Editor Chad Stone, which you can find here.

These six factors reflect both the technical and fundamental aspects of a company, giving us a “no-BS” snapshot of a stock’s overall health and future prospects at any given moment.

My Green Zone Power Ratings system then assigns a numerical score for each of these factors (from 0 to 100). The resulting scores are then averaged together to give each stock a single Green Zone Power Rating.

The resulting rating falls into one of five categories:

  • Strong Bullish (81-100).
  • Bullish (61-80).
  • Neutral (41-60).
  • Bearish (21-40).
  • High-Risk (0-20).

We’ve also included an “action to take” with each stock depending on where it lands on the spectrum. To learn more about these rankings and what each action means, check out the table below:

Factor investing: Green Zone Power Rating System Rankings

I know, I said my approach was “simple”…

Now here I am breaking out the spreadsheets!

I’m a bit of a geek for data and systems, so I hope you’ll bear with me.

Because the end result is my Green Zone Power Ratings system — available to use for free at the Money & Markets website.

Just click on the magnifying glass on the top right corner of your screen, type in a stock’s ticker to see its score, and you’ll shortcut hours of investment research.

For example, here’s what Tesla’s (NASDAQ: TSLA) rating looks like right now:

Green Zone Stock Power Rating Tesla (Nasdaq - TSLA)

The EV automaker scores high on Quality and Growth, because the metrics are pretty solid.

Meanwhile, its stratospheric price-to-earnings ratio is reflected in a low Value score…

And its massive, half-trillion-dollar market cap scores it a zero on Size.

Due to these factors, it scores at just 25/100 and ranks as Bearish.

As you can see from the color scheme, the system gives you an even simpler “green light”/ “red light” indicator to show whether a stock is worth investing in or not.

You might believe Tesla is a great business. It might have a bright future. It might defy all odds and outperform over the next 12 months.

But based on its Green Zone Power Rating, now is probably not a good time to buy shares.

And finding out why only took us about five seconds. We didn’t have to parse through any puff pieces, listen to his countless interviews or (heaven forbid) suffer through Elon Musk’s appearance on the Joe Rogan podcast.

Most importantly, this exact same “simplified” approach works with every stock out there…

Stay the Course: Consistent Execution for Consistent Results

Legendary investor Sir John Templeton once said: “The four most dangerous words in investing are ‘it’s different this time.’”

In other words — investors are often eager to make exceptions for a specific opportunity…

They’ll ride out Tesla’s vicious ups and downs because they believe in Elon Musk.

They’ll hold onto crashing cryptocurrency with “diamond hands” because they believe in sticking it to the system.

Or they’ll dive into a risky trade, promising themselves the fundamentals have somehow changed.

But when it comes to success in investing, consistency is crucial.

It’s vital to find a system that works well, then stick to your guns — repeating success over and over, year in and year out.

Based on an extensive study going all the way back to 2001, my team found that using Green Zone Power Ratings to guide your investing would help you beat the market 3-to-1.

If you stick with the highest-rated stocks exclusively, then you’re beating the market 15-to-1!

So instead of going “down the rabbit hole” with clickbait financial media, take the next ten minutes to review the Green Zone Power Ratings system on some of your biggest stock holdings.

You might be surprised by what you see!

Just click on the link below and type in a ticker to get started:

Beat the Market with the Green Zone Power Ratings System

And if you discover something unexpected in your portfolio, I’d love to hear about it!

Shoot me a quick email to BanyanEdge@BanyanHill.com and tell me which stock surprised you.

To good profits,

Adam O’Dell

Chief Investment Strategist, Money & Markets

Factor Investing: 6 Key Factors For Your Investing Success

In my trade, it’s practically a death sentence.

An affliction that creeps up insidiously…

Then — before you even realize what’s happening — it’s poisoned everything you’re doing.

You’ve probably heard of it too.

It’s called “analysis paralysis,” and it can be a nightmare for traders and investors.

After all, there are more than 6,000 tradable securities on the market. And there are more options, bonds, cryptocurrencies and niche investments than I could list out here.

We simply have so many opportunities to choose from these days, and as a result, it’s easy to get stuck in a loop of endless research and inaction.

Unfortunately, technology is only making this situation worse, too.

According to a recent study from Pew Research, the average American spends seven hours per day staring at screens. Seven hours! That’s nearly half our waking lives.

We’re taking in absolutely massive quantities of data, too.

Another study from USC Annenberg found that we’re taking in the equivalent of 174 newspapers worth of information every day.

That’s FIVE TIMES the amount of daily information you took in back in 1986.

Kind of like drinking from a firehose!

Most Americans don’t realize how detrimental this kind of overexposure can be. But it’s something I’m acutely aware of…

I’ve spent my entire career focusing on what’s called “factor investing,” developing specialized investing systems based on extensive research and analysis.

It’s the kind of investing that requires me to absorb as much information as possible—while still processing all that data into a profitable, repeatable strategy.

So we always have the temptation to soak up more data, to consider more opportunities.

But at the end of the day, it’s critical to stay focused on what really matters in investing: the profits.

Here’s how I do that…

6 Simple Factors for Investing Success

When I’m looking for my next great investment, I like to keep things simple.

That means I don’t fret over external factors like this year’s upcoming presidential election, whether bitcoin is trending or which blockbuster is top at the box office.

Instead, I focus on just six key factors:

  1. Momentum.
  2. Size.
  3. Volatility.
  4. Value.
  5. Quality.
  6. Growth.

That’s it.

I explained each of these factors at length in an interview with my Managing Editor Chad Stone, which you can find here.

These six factors reflect both the technical and fundamental aspects of a company, giving us a “no-BS” snapshot of a stock’s overall health and future prospects at any given moment.

My Green Zone Power Ratings system then assigns a numerical score for each of these factors (from 0 to 100). The resulting scores are then averaged together to give each stock a single Green Zone Power Rating.

The resulting rating falls into one of five categories:

  • Strong Bullish (81-100).
  • Bullish (61-80).
  • Neutral (41-60).
  • Bearish (21-40).
  • High-Risk (0-20).

We’ve also included an “action to take” with each stock depending on where it lands on the spectrum. To learn more about these rankings and what each action means, check out the table below:

Factor investing: Green Zone Power Rating System Rankings

I know, I said my approach was “simple”…

Now here I am breaking out the spreadsheets!

I’m a bit of a geek for data and systems, so I hope you’ll bear with me.

Because the end result is my Green Zone Power Ratings system — available to use for free at the Money & Markets website.

Just click on the magnifying glass on the top right corner of your screen, type in a stock’s ticker to see its score, and you’ll shortcut hours of investment research.

For example, here’s what Tesla’s (NASDAQ: TSLA) rating looks like right now:

Green Zone Stock Power Rating Tesla (Nasdaq - TSLA)

The EV automaker scores high on Quality and Growth, because the metrics are pretty solid.

Meanwhile, its stratospheric price-to-earnings ratio is reflected in a low Value score…

And its massive, half-trillion-dollar market cap scores it a zero on Size.

Due to these factors, it scores at just 25/100 and ranks as Bearish.

As you can see from the color scheme, the system gives you an even simpler “green light”/ “red light” indicator to show whether a stock is worth investing in or not.

You might believe Tesla is a great business. It might have a bright future. It might defy all odds and outperform over the next 12 months.

But based on its Green Zone Power Rating, now is probably not a good time to buy shares.

And finding out why only took us about five seconds. We didn’t have to parse through any puff pieces, listen to his countless interviews or (heaven forbid) suffer through Elon Musk’s appearance on the Joe Rogan podcast.

Most importantly, this exact same “simplified” approach works with every stock out there…

Stay the Course: Consistent Execution for Consistent Results

Legendary investor Sir John Templeton once said: “The four most dangerous words in investing are ‘it’s different this time.’”

In other words — investors are often eager to make exceptions for a specific opportunity…

They’ll ride out Tesla’s vicious ups and downs because they believe in Elon Musk.

They’ll hold onto crashing cryptocurrency with “diamond hands” because they believe in sticking it to the system.

Or they’ll dive into a risky trade, promising themselves the fundamentals have somehow changed.

But when it comes to success in investing, consistency is crucial.

It’s vital to find a system that works well, then stick to your guns — repeating success over and over, year in and year out.

Based on an extensive study going all the way back to 2001, my team found that using Green Zone Power Ratings to guide your investing would help you beat the market 3-to-1.

If you stick with the highest-rated stocks exclusively, then you’re beating the market 15-to-1!

So instead of going “down the rabbit hole” with clickbait financial media, take the next ten minutes to review the Green Zone Power Ratings system on some of your biggest stock holdings.

You might be surprised by what you see!

Just click on the link below and type in a ticker to get started:

Beat the Market with the Green Zone Power Ratings System

And if you discover something unexpected in your portfolio, I’d love to hear about it!

Shoot me a quick email to BanyanEdge@BanyanHill.com and tell me which stock surprised you.

To good profits,

Adam O’Dell

Chief Investment Strategist, Money & Markets

Pop to Profits: ABBA’s Waterloo Lesson for Long-Term Investing

You might think of ABBA as a Swedish disco group known for flashy costumes and catchy pop songs.

But they’re also a source of deep wisdom that can be applied to investing and the stock market. Although, to be fair, that’s not what they intended it to be when they wrote “Waterloo.”

These song lyrics include two important lessons.

First is this: “The history book on the shelf is always repeating itself.”

We know that market patterns tend to repeat. Learning market history is always time well spent. But all history contains lessons for investors. That includes the Battle of Waterloo.

More importantly, we have the line: “At Waterloo, Napoleon did surrender.”

That sums up the extent of what most people know about that famous battle. The lesson for investors comes from digging deeper…

Learning From Napoleon’s Defeat

Napoleon Bonaparte originally came to power in 1799. He brought an end to the French Revolution, which started with good intentions but led to the deaths of hundreds of thousands of French citizens.

After restoring calm in France, Napoleon set off to conquer Europe. This resulted in at least 3.5 million deaths. In 1814, an alliance of European powers defeated Napoleon and exiled him.

Less than a year later, Napoleon decided to return to France and resume his battle for Europe. He took the offensive and moved forces into Belgium. From his perspective, that was an ideal location for a battle. If he won, he would split the forces against him, allowing him to wage war against smaller armies, one at a time.

However, battle locations tend to be determined by fate rather than generals. Napoleon ended up being forced to attack near Waterloo. A battle occurred over three days in June. Napoleon won the first three encounters.

Long-term investing lesson from Napoleon's Battle of Waterloo.

Napoleon was winning what would prove to be the final encounter when a large Prussian force arrived late in the day to reinforce the Duke of Wellington’s British forces.

Wellington is an inspiration for investors.

He focused on the big picture. He knew that Allied forces had lost the first three encounters. He also knew that he was preparing for a decisive battle in the center of the field.

Other commanders might have redeployed forces to prevent losses in those minor skirmishes that Napoleon won. But Wellington resisted that temptation. He had a battle plan — and he executed it.

Wellington chose to position his forces on a ridge near the town of Waterloo, which offered a strong defensive position. The ridge allowed him to conceal his forces from Napoleon’s view and provided a natural barrier against the French cavalry.

He prepared for what he knew would be a decisive moment. Then he waited for Napoleon.

Wellington’s eventual victory helps us understand how to win in the market.

Commit to Your Long-Term Investing Plan

Investors often lose sight of their long-term goals. Maybe they own a stock they expect to do well in over the next three years.

Then the company misses earnings by a penny the quarter after they bought. The stock sells off, and they decide to unload their shares with a small loss.

The next day, analysts may upgrade the stock, but it won’t matter at that point. The investor who capitulated no longer has a position.

Modeling after Wellington, investors would know to ignore minor setbacks. They would stick to their plan.

History books are filled with battles like Waterloo, where the winning generals overcame initial setbacks to achieve victory. That sounds a lot like investing, but many investors still ignore these history lessons.

In the markets, as in battles, it’s better to be like Wellington than Napoleon.

Take defensive positions and execute your plan. That leads to victory — and profits — in the long run.

Regards,

Michael Carr's Signature
Michael Carr
Editor, Precision Profits

Pop to Profits: ABBA’s Waterloo Lesson for Long-Term Investing

You might think of ABBA as a Swedish disco group known for flashy costumes and catchy pop songs.

But they’re also a source of deep wisdom that can be applied to investing and the stock market. Although, to be fair, that’s not what they intended it to be when they wrote “Waterloo.”

These song lyrics include two important lessons.

First is this: “The history book on the shelf is always repeating itself.”

We know that market patterns tend to repeat. Learning market history is always time well spent. But all history contains lessons for investors. That includes the Battle of Waterloo.

More importantly, we have the line: “At Waterloo, Napoleon did surrender.”

That sums up the extent of what most people know about that famous battle. The lesson for investors comes from digging deeper…

Learning From Napoleon’s Defeat

Napoleon Bonaparte originally came to power in 1799. He brought an end to the French Revolution, which started with good intentions but led to the deaths of hundreds of thousands of French citizens.

After restoring calm in France, Napoleon set off to conquer Europe. This resulted in at least 3.5 million deaths. In 1814, an alliance of European powers defeated Napoleon and exiled him.

Less than a year later, Napoleon decided to return to France and resume his battle for Europe. He took the offensive and moved forces into Belgium. From his perspective, that was an ideal location for a battle. If he won, he would split the forces against him, allowing him to wage war against smaller armies, one at a time.

However, battle locations tend to be determined by fate rather than generals. Napoleon ended up being forced to attack near Waterloo. A battle occurred over three days in June. Napoleon won the first three encounters.

Long-term investing lesson from Napoleon's Battle of Waterloo.

Napoleon was winning what would prove to be the final encounter when a large Prussian force arrived late in the day to reinforce the Duke of Wellington’s British forces.

Wellington is an inspiration for investors.

He focused on the big picture. He knew that Allied forces had lost the first three encounters. He also knew that he was preparing for a decisive battle in the center of the field.

Other commanders might have redeployed forces to prevent losses in those minor skirmishes that Napoleon won. But Wellington resisted that temptation. He had a battle plan — and he executed it.

Wellington chose to position his forces on a ridge near the town of Waterloo, which offered a strong defensive position. The ridge allowed him to conceal his forces from Napoleon’s view and provided a natural barrier against the French cavalry.

He prepared for what he knew would be a decisive moment. Then he waited for Napoleon.

Wellington’s eventual victory helps us understand how to win in the market.

Commit to Your Long-Term Investing Plan

Investors often lose sight of their long-term goals. Maybe they own a stock they expect to do well in over the next three years.

Then the company misses earnings by a penny the quarter after they bought. The stock sells off, and they decide to unload their shares with a small loss.

The next day, analysts may upgrade the stock, but it won’t matter at that point. The investor who capitulated no longer has a position.

Modeling after Wellington, investors would know to ignore minor setbacks. They would stick to their plan.

History books are filled with battles like Waterloo, where the winning generals overcame initial setbacks to achieve victory. That sounds a lot like investing, but many investors still ignore these history lessons.

In the markets, as in battles, it’s better to be like Wellington than Napoleon.

Take defensive positions and execute your plan. That leads to victory — and profits — in the long run.

Regards,

Michael Carr's Signature
Michael Carr
Editor, Precision Profits

Investing Strategies: Your 1-2 PUNCH for Investing in Today’s Market

The posters were plastered all over New York City…

March 8, 1971. The fight of the century…

Joe Frazier vs. Muhammad Ali

Joe Frazier vs. Muhammad Ali for the world heavyweight championship.

It was a sold-out show at Madison Square Garden.

After 15 rounds, Frazier gave Ali his first official loss by unanimous decision.

The 1-2 punch combo stole the show.

Now, I have to ask … are you ready to go 15 rounds undefeated in this market?

Because if not, I’ve got two investing strategies — the perfect combo — for you to dominate the market.

Punch No. 1

The average investor sees a stock rise and thinks, “Surely, it reached the top.”

That’s just not the case.

In fact, the stock could be ready to surge higher. Much higher.

This is what happened with Sea Limited (NYSE: SE)

After a nice 132% gain, investors probably thought that was it. Time to sell.

Wrong.

Sure enough, over the next few months, the stock went up 200%…

Then 400%…

Then 600%…

And then … it hit an 889% profit.

Sea Limited (NYSE - SE) 889% stock gains.

Now, how could you have known that this stock, which had already doubled, would go on to jump nearly 900%?

Well, you couldn’t. Nobody could.

But, a system could. So that’s what I built.

And 20 years of backtesting showed that trading with this system would have produced a 3,514% gain … turning a $10,000 stake into $351,400.

I launched it almost three months ago. And here’s what my readers have sent me about it:

  • “The best system ever. Perfect. Period.” — James
  • “It’s my favorite new strategy.” — Andy
  • “Absolutely love it. Just doing phenomenally well.” — Bob

Now, I want to share it with you.

Action to Take No. 1: Give me 3 minutes.

I’ll share with you why you need Profit Accelerator in just 3 minutes. If you like what you hear (I know you will), see how you can join me below.

Check it out here:

➡️ Here’s the Profit Accelerator link I mentioned. ⬅️ 

And if you prefer to read the transcript, click here.

Punch No. 2

While the first punch is your offense … a way to accelerate your profits…

Here’s your long-term strategy — your defense in 15 rounds in the ring…

There’s a special class of stock that I’ve researched for years. It had the power to turn $1,000 … into as much as $10,000 — within ten years, five years and sometimes…

In as little as ONE year.

All without any kind of risky leverage or complicated options.

In fact, this special class of stock accounts for roughly 90% of ALL stocks that have gone up by 1,000% or more over the last decade.

But often, the gains can come much faster.

In the last year alone, Soleno Therapeutics (Nasdaq: SLNO) gained more than 2,180%.

Soleno Therapeutics (Nasdaq - SLNO) makes a 2,184% gain.

Anyone who invested just $1,000 into Soleno a year ago would be sitting on more than $22,000 today.

That’s how powerful this class of stock is.

More than 386 of these stocks gained 1,000% or more over the last decade.

And they form the key component in what I call OMEGA stocks…

I’ve seen OMEGA stocks produce incredible, market-beating returns.

But chances are, you’ve never heard about OMEGA stocks before. I’d wager 99.9% of investors haven’t.

You’re not going to read about OMEGA stocks in the pages of The Wall Street Journal

Very few analysts even cover them.

At least, not until long after the biggest gains have been made…

And the Real Talk is that those gains are meant for you.

OMEGA stocks are one investment Main Street Americans can get into before Wall Street.

Action to Take No. 2: Buy OMEGA stocks.

You can watch my Omega Stock Project here or read the official transcript here.

I’ll share with you details about my top three OMEGA stocks today.

These two investing strategies are the perfect complement in today’s market — two arrows for your quiver … the knockout 1-2 punch.

Regards,

Charles Mizrahi

Charles Mizrahi
Founder, Alpha Investor