Starting next week, you are going see some very exciting changes from Investor’s Daily Edge. At the top of the list is Bob Irish, our new Investment Director and a 30-year veteran of the market. He began his career at Institutional Investor magazine, and then spent the next 25 years at two world-class money management firms.
Bob was introduced to us by Michael Masterson, the Editor Emeritus of Investor’s Daily Edge, and the founder of our parent company, Early To Rise. Last night, I had a chance to sit down with him at the cigar bar around the corner from our offices.
We talked about the markets, what makes high quality investment research and improvements to Investor’s Daily Edge that will make YOU a better and more successful investor.
Jon Herring
Editorial Director
Investor’s Daily Edge
—————————————————
Michael Masterson introduced you to us. How did the two of you meet?
(Laughing) I don’t remember!
I see we’re off to a great start. You do know Michael Masterson don’t you?
Yes. We’re neighbors and we’ve become very good friends. Over the years, we have probably smoked 1,000 great cigars together, talking about everything from rock and roll to the efficient market hypothesis. We’ve also traveled the world together – Turkey, Morocco and Nicaragua, to mention a few countries. That’s how I know Michael.
And what has Michael Masterson taught you about investing?
(Laughing) Nothing… He’s learned everything he knows about investing from me!
I see. So what have you taught him?
That it’s not impossible to build wealth safely with stocks and bonds. When I first met Michael he was as he was as anti-traditional capital markets as anybody I had ever met.
I’ve known plenty of people who don’t trust the markets, who don’t understand the markets or just don’t have the money to invest.
But Michael was clearly a very successful guy. And I had never met someone of such great wealth who had so little interest and so much distrust for the capital markets. It made me curious how he did so well staying out of what has been a wealth-generating machine for millions of people.
And Michael became curious about what I was doing. Over the years, he began to believe that it was possible to make substantial money in the markets, safely and consistently.
And so what did you discover?
What I discovered was that he created over a billion dollars worth of wealth for him and his clients by applying the very same principles that I’ve used in the stock market.
Really?
Yes. It took us many conversations and quite a few Churchills to figure it out. But making a fortune in the investment markets depends on the same fundamental wealth-building secrets that he used in building private businesses.
So, what are some of those secrets?
The most important is this: knowing the business you are getting into very, very well. Of course, as an investor, if you don’t know the business backwards and forwards, you need to find somebody who does. The key is to find a specialist.
The best investors are not generalists. They are super-focused. They know their sector perfectly. Take Doug Casey and his associates at Casey Research, for example. They have made tons of money in mining stocks over the years.
They know every company and every company president. They know the geologists. They have been to the wells and the mines. They know how they work. They know the brokers and the bankers. They are dialed-in and highly focused.
Or consider, Rusty McDougal – one of our analysts – who is also highly focused in natural resources. Rusty has been studying precious metals and energy exploration companies every single day for more than 15 years. That is dedication. That is focus.
And just think how it has paid off. In his personal account, he has purchased well over a dozen stocks that have appreciated more than 1,000%. And his subscribers are benefitting too. In the last year his recommendations are something like 16 out of 17 winners.
So having that focus is huge.
How does the kind of research you’re talking about compare to some of the institutional research that’s out there?
Just about every investment advisor, institution and private newsletter can do well now and then. But very few beat the market over the long haul. Those that do, achieve their impressive track records by having knowledge that is deep and very specific.
Most institutional research is brainy, but few of them do well in the long term because they don’t focus. They cover too many companies. You can’t possibly understand the financial prospects of a business if you are covering dozens or even hundreds at a time.
The money management firm I worked with over the last ten years had one of the best track records in the business. And not only did we outperform our competitors year after year, but we avoided many of the biggest losers that can stripped even the best investors of their profits.
So this level of research and focus helps in two ways. It keeps you out of bad deals. And it gets you into good deals.
Give me an example of what you mean… where the depth of your research kept you out of a bad deal.
Take Enron for example. Enron had a market capitalization of $65 billion at one time. That means that most institutions and money managers owned at least some of it. But the firm I was with… we owned zero shares of Enron and none of their bonds.
We had several meetings with the CEO and CFO of Enron and got a bad feeling about how those people were comporting themselves. And they could never explain to our satisfaction how they were making money. To use an expression: the bullshit meter went off. And when the B.S. meter goes off you don’t put it in your portfolio.
And this is where the second secret comes in. And your research must be in-depth.
Give me an example of what you mean by “in-depth research” and how you are going to take this insight into IDE?
The guys you have… Steve, Andy, Rusty and Ted are all very good. They are experienced. They are knowledgeable. And they have great instincts. If you look at their track records you can see the results of the work they have done.
I would have never accepted this position if I was not very impressed with Investor’s Daily Edge. But to do the very best job for our readers over the long term, we need to focus more and dig much deeper as researchers.
It’s not enough just to read over the balance sheet and income statement and place a call to the CEO, thinking you’ve got an inside track. Hell, some CEOs know less about their company than their vendors.
As Michael Masterson has told me many times before, there is a lot of stuff that goes on in his own business that he has no idea about. And he’s talking about just a few hundred people. Most people are interested in protecting their jobs and are more than happy to filter information from the boss if it helps them to do so. So what happens when you have a business of 4,000 people… or 40,000 people? Do you think that CEO really knows what’s going on?
If you really want to know what is going on with a company, you need to talk to the competition. You need to talk to the vendors and suppliers. You need to talk to the customers. You even need to find out who their banking relationships are with.
You might invest in a solid company. But what if they have an important line of credit that gets cut off through no fault of their own? That’s exactly what just happened with CIT, which provided financing for hundreds of companies that are struggling now because their line of financing got cut.
So, in addition to the detailed financial research, this is the kind of digging you need to do to come up with the best ideas and have the strongest conviction in those ideas. And this is exactly what you will come to expect from Investor’s Daily Edge.
That is a very important point… having rock-solid conviction in your ideas.
You must have the courage of your convictions. And you can’t be afraid of the lonely idea. But the only way to possess that rock-solid confidence and avoid the herd mentality is to base your convictions on deep, serious research.
One of the advantages you get from this kind of research is the discovery of secrets that are simply unknown to 99% of the investment advisory world.
And that’s the kind of research our readers can expect from IDE.
You better believe it… serious, institutional-level research that is unbiased, courageous and honest.
How will this manifest itself in our newsletters?
When our readers get their newsletters they are going to look much different. There won’t be any more eight page summaries and three stock recommendations. That might have worked years ago when a rising tide lifted all boats.
But there is a good chance we are going to be faced with a flat or sideways market for years, if not a decade to come. In a market like that, stock selection is critical. And to select the best stocks, it is imperative that you rely on focused analysts who provide serious research.
And that is what we will provide, under my direction. Serious investment tools for individual investors who want big profits with safety. Each issue of our paid newsletters will contain an investor’s summary up front to give readers the quick view. And that will be followed by ten or twenty pages of specific, detailed analysis. That’s where you will read interviews with competitors and vendors, and where you will see both sides of the balance sheet analyzed.
The equity guys are always looking for a reason for the share price to go up while debt guys are always looking to see if the company can pay its bills. But both need to be studied and compared.
And the benefits to all this?
The newsletters will contain more detailed information. They will provide all the in-depth back up that the readers need if they want to scrutinize the analysis. And the end result will definitely be safer and stronger long-term gains.
This is very exciting. But you are talking about research that, in the institutional world, could easily cost $5,000 per issue. As the guy who’s in charge of this, you’ve got me scared. I am going to have to hire more assistants and analysts… a bigger research staff. And that means the price of our newsletters will have to go up.
Well that’s probably true. And that’s why I’m talking to the marketing people right now about introducing a one-time offer for those subscribers who are paying for our research and newsletter right now. We will create an opportunity for them to lock in their current subscriptions, at the current price… for life.
Imagine, getting a lifetime upgrade to fly first class for the price of coach. That’s exactly what we intend to deliver.
[Editor’s Note: If you currently subscribe to any of the Investor’s Daily Edge paid newsletters and research services, drop us an email at feedback@investorsdailyedge.com. You’ll be the first to know when this offer is finalized, so you can lock in your subscription at today’s “coach rate” and fly first class for life.
And stay tuned to Investor’s Daily Edge. We will be unveiling a new format next week and even deeper coverage of the opportunities that can put more wealth in your pocket!]
