By Alexander Green I recently spoke to a neighbor who is filled with despair about his investments.
Despite the roaring bull market of the last eight years, his portfolio has performed poorly. In fact, his net worth is no greater than it was a decade ago.
“I seem to have a real knack for doing the wrong thing,” he confessed. “I’m completely in cash now. I’ve finally realized I’m never going to beat those sharks on Wall Street.”
This defeatist attitude is woefully out of touch with reality. The truth is individual investors have never had it better than they do today.
Your investment choices today have never been greater. Spreads have never been thinner. Fees have never been lower. Trade executions have never been faster. Monitoring your portfolio has never been easier.
Plus, it’s much simpler to manage your own portfolio than billions of dollars belonging to tens of thousands of investors. This is particularly true thanks to the internet.
Thirty years ago, I wrote research reports for an international brokerage firm. This generally required multiple phone calls to investment banks and trading houses where I coaxed, cajoled, wheedled (OK, begged) other analysts to send me what I needed.
When the information arrived – usually days later – it required follow-up calls to update the data. But by the time the reports were printed and mailed out to clients, the information was old news anyway.
The web changed all that.
In short, you have all the tools you need to succeed. Yet many investors still lack the most crucial ingredient of all: the winning investment ideas to take advantage of this.
After all, growth stocks sometimes fail to grow. Value stocks can become (ahem) better values. Takeover candidates may receive no takeover bids.
There are as many ways to fail on Wall Street as there are ways to succeed. That’s why I keep coming back to the one technique that offers the highest probability of success – in good markets and bad.
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I’m talking about riding the coattails of knowledgeable insiders.
Who are the insiders, exactly? From a legal standpoint, they are the officers who run a company and the directors who sit on its board.
These individuals have access to all sorts of material, nonpublic information. For instance, they know about…
The direction of sales since the last quarterly report
New products and services in development
Plans to expand or cut costs
The status of pending litigation
Whether the company has gained or lost any major customers
Whether there are any planned mergers or acquisitions…
And plenty of other good stuff that is unavailable to those of us on the outside looking in.
That’s why the SEC requires corporate insiders to file a Form 4 within two business days of any purchase or sale, detailing the number of shares they bought, when and at what price.
If you want to be a better investor, you need to know what these insiders are doing.
Even when corporate fundamentals are checkered or poor, if the insiders are buying heavily, it is often a sign that a stock is set to surge …read more
Source:: Investment You
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