First rule of investment: be careful
This has always been my main investment mantra, even when it seems old fashioned. With the proliferation of smartphones, we’ve entered a new information age, and it’s hard to find someone who doesn’t know the prices of the relevant securities in real time. What is amazing is the preponderance of advice that can be found on financial sites that espouse a kind of willful blindness. Don’t worry about your portfolio, Janet Yellen and Jerome Powell got it!
Garbage can. Knowledge is power.
As I mentioned in my column last week, the best way for an individual investor to reduce the figurative “house edge” of the Wall Street “casino” is through basic research. But there’s this funnel that wants to push some sort of watered-down Wall Street group thought into your throat, and I’ve been a part of that machine for over a decade on two different continents.
I’m old enough that much of my sales career took place before the Information Age really blossomed (the Internet existed, but the World Wide Web was only slowly adopted for investment) and in the decades that followed, I witnessed a democratization of information that would have choked JP Morgan on his cigar. It is no longer an insider’s game in terms of information. God knows the Fidelitys and BlackRocks (BLKs) of the world – with assets under management measured in the trillions of dollars – could crush any of us like a bug, but knowledge is power. . Size is as much a disadvantage in portfolio management as it is an advantage. I have seen this dynamic play out several times.
So, if you want to beat the big guys, you should be looking for new sources of information. Here are some ideas:
Subscribe to a financial site that features independent thinkers and seasoned analysts like Chris Versace (a former colleague at DLJ) and dedicated market trackers like Carley Garner on the commodities front and Jim “The Rev Shark” DePorre on the equity side. It is Real money, and, of course, you are already consuming the content. Glory.
Watch the bond market. Always. i use Bloomberg rates and bonds page. The bond market tells you that any loosening by the Fed in quantitative easing will lead to a big pullback, and these always precede crashes. We’re in the 1970s, man. But back then, yields were in the single-digit highs and even hit double-digit lows. The cost of money hasn’t changed much. The Fed has created a bubble. The bond market will understand this long before the stock market. So use the St. Louis Fed’s excellent FRED Database to have a historical perspective.
Look at the goods. This is where the stagflation of the current global economy is most evident. I Check Oil price every morning and several times a day.
Look at China. My training in stock research is in the automotive industry, so I’m going to autonews.gasgoo.com every day too. The Chinese economy is currently going through extreme controtions with energy rationing, semiconductor rationing, and the shift from transportation to electrified powertrains. I am biased, but I believe the automotive industry is the best indicator sector for the global economy.
I could do without all of the honky-tonk and constant left-wing prejudice that emanates from NBC News, and I find CNBC’s corporate affiliation with its parent company just too hard to accept. So when I want quotes I go to invest.com, although I still check a few names on cnbc.com. The information is the same. Just make sure you get as little propaganda as possible. It helps to have a clear mind when making transactions.
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