3 Wealth-Building Lessons From One of My Best Calls Ever

Advertisement

Ten years ago, I nailed it. I don’t mean to brag, but it was one of the best calls I ever made.

The date was Friday, March 6, 2009. I was appearing on television on Fox Business. The market had been in a long and brutal decline after the financial crisis and Great Recession. The S&P 500 was down 57% from its last high, which had come nearly two years earlier. Investors were not happy.

I went against the grain. The selling was about done, I said. Long-term investors needed to buy stocks. (Click here if you want to see the interview, as embarrassing as it is to show myself 10 years ago.)

The market made its intraday bottom that very day. The next trading day, Monday, March 9, the S&P 500 made its closing low of 676.53.

Ten years later, on Friday, March 8, 2019, the S&P closed at 2,743.07 — a 305% gain.

The funny thing is… I wasn’t even trying to call a bottom. Not an exact bottom, anyway. Any investor who thinks they can pick precise bottoms or tops is a fool. I didn’t know if the bottom was coming that day, the next week, or even months later.

Here’s what I did know: I knew that if anyone ever wanted to own stocks again, it was as good of a time as any to buy. I knew that capitalism and the fortitude of the American people would eventually win.

There were too many companies selling products that we need to survive. Products that were (and still are) a part of our everyday life. Banks that had been around for over a century. Even in the greatest of depressions, a few banks come out on the other side.

This was a call on the future of our society.

I got lucky calling the bottom on the exact day it happened. But I don’t believe it was all luck. It was reading the market. It was knowing that valuations were absurdly low. And it was knowing that America and stock prices would be much higher over time.

That’s why I said long-term investors should buy stocks — the right stocks, of course — at what I believed would be at or near the lowest prices they would ever see.

I even made some recommendations that did indeed move much higher in the next few years.

Multiplying Your Money

On Sunday, March 8, 2009, I published an article with what I called the “Andrew Jackson Portfolio.” It was nine stocks whose share prices added up to a $20 bill, which has President Jackson’s picture on it.

I wrote in the article that the portfolio could double in five years, even if some of the companies went bankrupt.

I was wrong with that call, though. The portfolio multiplied five times in five years… even with two of the companies going bankrupt.

I pointed out that one share of each of those nine stocks would have cost you $315.58 five years earlier. That day, you could buy them for $20.25 — almost 95% cheaper!

Here are the stocks and how they did over the next five years. (Note: Prices are adjusted for splits and dividends, so the total looks higher than $20.25.)

General Motors (NYSE:GM) went under and came back, but the stock in this portfolio was worthless. Eastman Kodak (NYSE:KODK) was a wipeout as well.

But if you had bought that basket of nine stocks on that day, you would have made 410% on your money.

Three Key Takeaways

I’m writing to you about the 2009 market bottom because it happened at this time 10 years ago. I also bring it up because there are important takeaways for us a decade later.

1. “Building your own ETF” is often a brilliant way to invest.

Buying a basket of stocks is a strategy we use quite a bit in my investment services. I call it building our own ETF, only better.

An ETF is a diversified investment fund that trades like a stock. Most ETFs hold dozens or hundreds of different companies. This is one of their big allures. They can give you diversified exposure to a sector or country. ETFs can be very useful investment vehicles.

However, because ETFs hold so many stocks, an ETF buyer is virtually guaranteed to end up owning a lot of average companies… and even some crappy ones.

On the other hand, if you want to profit from a big business or technological innovation, you can try to buy one single stock. Doing so exposes you to significant downside risk. If there is a major problem at your chosen company (like an accounting scandal or a crazy management decision), you could suffer a big loss.

Building your own ETF solves both problems. You identify three to six of the best companies in a sector and buy all of them. By purchasing a handful of the best companies, you avoid owning the weaker players that prepackaged ETFs force you to own. This gives you lots of upside potential but provides you with some diversification.

The Andrew Jackson Portfolio wasn’t in one specific theme, but it worked the same way. I identified a basket of stocks most likely to head higher. I knew some might go bankrupt as well, and two did. In the end, the overall portfolio still returned big profits.

2. I’m still bullish.

Very bullish, actually.

I believe the S&P 500 will be up as much as 25% at some point this year.

I made the same statement on CNN. (You can click here to see a clip of my CNN interview.)

I said it earlier in the year, and I still believe it.

A lot of factors enter into my thinking, but one of the biggest is earnings. I expect earnings to grow more than the consensus.

Am I going out on a limb?

I don’t think so. Analysts have undershot earnings growth so much lately it’s ridiculous. It’s almost compulsory to shoot low so that if and when earnings do slow down they’ll be able to say they got it right.

3. True wealth is built over time and by investing in world-changing trends.

There will always be ups and downs in the market and our stocks. Sometimes they hurt. Sometimes a lot.

The years from 2007 to 2009 were down. The last decade has been up.

History tells us over and over again that the market ultimately moves higher.

That’s why you shouldn’t try to pick exact bottoms or tops. It’s also why nothing changes even if my prediction that the market will be up 25% at some point this year turns out to be wrong.

The bottom line is that 2019 is still shaping up to be a good year for the market overall. And it’s shaping up to be an even better year for the themes and stocks we’re invested in — from marijuana to autonomous vehicles to the next battery breakthrough and more.

A smart, forward-thinking “thematic” investor can make stupendous returns by spotting world-shaping business trends early and staking early claims.

That’s not a prediction. That’s the truth.

And one of the biggest investing themes with the potential to multiply your money is the coming breakthrough in battery technology.

Insiders are already calling this potential new battery a “paradigm shift” in energy technology. Forbes calls it simply: “The battery that could change the world.”

I’m amazed by it.

This breakthrough device could change just about everything in your life — from how you get around to how you communicate with others… even the way you think about the world.

For early investors, this presents the kind of moneymaking opportunity that could turn a tiny initial stake into an absolute fortune.

Folks who get in on this breakthrough now, BEFORE it’s rolled out on a mass scale, will have the chance to be a part of perhaps the single largest legal creation of wealth in the last 25 years.

Over the past year, I’ve spent an enormous amount of time studying the battery industry. I can share with you what I’ve learned and show you how to profit. Click here to learn more.


Article printed from InvestorPlace Media, https://investorplace.com/moneywire/2019/03/3-wealth-building-lessons-from-one-of-my-best-calls-ever/.

©2024 InvestorPlace Media, LLC