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Picking a winner only matters if you get this decision right
Would you rather own one asset or an empire?
In 1977, 20th Century Fox released a strange science-fiction movie that would soon become the highest-grossing film ever made.
The studio took a gamble that other movie production companies had rejected. Fox had backed the right director, financed the right movie, and introduced the world to a franchise that would ultimately generate billions of dollars.
Fox had helped produce a historic success.
But George Lucas had made the better bet.
While negotiating the details of the movie’s production, Lucas reportedly surrendered hundreds of thousands of dollars in his customary directing fees in exchange for something Fox considered far less valuable: control over the sequels and merchandising rights.
Fox owned a successful movie.
Lucas owned a franchise empire.
Credit: TracyHornbrook
Both sides recognized enough potential in Star Wars to move forward. The difference was how they structured their exposure to its success.
Investors rarely think about their portfolios in those terms. It’s not just the stocks you own, but how much.
It’s Not Just About Stock Picking
I’m probably like the rest of our Digest readers in that I spend a ton of time consuming financial media. I routinely get information from television, radio, podcasts, social media, and newspapers.
Nearly all of this coverage focuses on stock picking.
And that makes sense because most individual investors spend their time trying to find the best stocks to buy. They don’t spend any time thinking about how much of each stock to own to maximize their portfolio’s gains.
It’s easy to see why this can create pitfalls in your wealth-building strategy.
Imagine that you identify a small tech company that goes on to rise 500%.
Congratulations! That sounds like a life-changing investment.
But if you put only 1% of your portfolio into it, even with that extraordinary winner, the stock would add only approximately 5% to your total portfolio.
Now, imagine that you invested 20% of your money in another company and it fell by 50%. That single mistake costs your portfolio 10%.
You found a 500% winner – and yet you still ended up behind!
That’s not to say that stock picking is easy. There’s a reason why we depend so much on experts such as Louis Navellier, Luke Lango, and Eric Fry.
But these problems have become more acute in the age of AI. The market moves faster than ever and has produced some extraordinary winners.
Regular Digest readers will recognize some of these big winners that Louis, Luke, and Eric recommended to their subscribers.
Louis’ open Nvidia (NVDA) recommendation, for example, was recently showing a gain of approximately 5,000%.
That is enough to turn a $10,000 investment into roughly $500,000.
Luke Lango has four open recommendations up more than 1,000%, and several more above 500%.
He recommended Rocket Lab (RKLB) before it became a 10-bagger for one of his subscribers. According to that reader, he considered selling after the stock doubled. Instead, he decided to hold on and saw the stock rise approximately tenfold.
And Eric Fry recently took partial profits in Westgold Resources (WGXRF), with a gain of roughly 1,700%. Eric has more than 40 recommendations in his track record that went on to gain 10X.
These are extraordinary stock picks.
These kinds of gains can transform your financial life – if you own enough of the stocks producing them.
A 10-bagger may produce little more than a pleasant surprise if it represents only a tiny fraction of your portfolio.
And if you invest too heavily, even a promising company can expose you to painful losses when something goes wrong.
That’s why professional investors devote so much attention to portfolio construction.
They don’t merely ask: “Which stocks do we want to own?”
They also ask: “How much should we invest in each one?”
Making the Decision Easier
And that brings me to an important announcement from legendary investor and Senior Quantitative Analyst Louis Navellier.
After nearly five decades of identifying some of the market’s most successful stocks, Louis has concluded that investors need more than another recommendation.
AI is moving too quickly. The potential rewards are becoming too large. And the divide between the companies benefiting from this revolution and those left behind is widening.
That is why Louis is preparing to make one of the most important announcements of his career.
On Aug. 19, he will join Luke and Eric for a special presentation about what they believe is coming next in the AI boom and a major change they are making to help investors navigate it.
They will also address the crucial question most investment research leaves unanswered:
Once you identify an extraordinary opportunity, how much should you own?
I’ve already had an opportunity to see what they will reveal, and it goes well beyond another AI prediction or individual stock recommendation.
It represents a fundamental change in how they can help investors pursue the tremendous opportunities ahead – all while addressing the risk that one wrong decision could overwhelm everything else they get right.
20th Century Fox helped create one of the most valuable entertainment franchises in history.
But George Lucas structured his stake so that the success of Star Wars could transform his life.
In the Age of AI, finding the right opportunity is only the beginning.
You must also make the right bet.
Click here to reserve your place for Louis’ important announcement with Luke and Eric.
And then circle your calendar for Aug. 19 at 10 a.m. ET.
It won’t just be about stock picks, but how to ensure you own the right amount.
Enjoy your weekend,
Luis Hernandez
Editor in Chief, InvestorPlace
