Discover How to Invest: The Revolution of Information Technology in Successful Investment Approaches

 Discover How to Invest: The Revolution of Information Technology in Successful Investment Approaches

Are you interested in learning how to routinely generate double and triple digit profits on your stock investments? Technology. Information is the answer. Indeed. technique of information.

Major investing firms' analysts are not even aware of the majority of the stocks I've held that have returned over 50% in less than a year. How am I aware of this? Since I was a private banker and wealth manager for two Fortune 500 financial services companies, I was never able to locate any research on the stocks that most interested me at these companies. Why?

since the major investment businesses have not kept up with the significant changes in the methods of making money from investments. The fact that the majority of large investment firms are little more than glorified marketing machines is one of the reasons they have not kept up. Nearly all managers at major investment firms are paid based on the amount of profit and fee income their office generates for the company, not on the caliber of work their financial consultants have done for their clients. These two objectives are very different from one another. For this reason, in an interview that he never thought would be made public, former Merrill Lynch star internet analyst Henry Blodgett said that the companies that other Merrill analysts were touting as top picks on TV were "crap" and "junk" (Source: Fort Worth Star Telegram, May 26, 2002).

It is tough for even the most sincere financial advisors at large investment firms to locate excellent chances for you among the equities that their company monitors. Why? Because many companies require their star analysts to be older and have a great deal of expertise. They feel that a chief industry analyst with a few gray hairs is significantly more believable when he or she appears on television and speaks to their top clients and the American people. In my opinion, all of my analysts would likely be under 30 years old if I had an investment company. Why?

Information technology, however, has completely changed analysts' capacity to identify firms with extraordinary growth potential before the broader public learns about them. By using targeted keyword searches in internet search engines, leads can also be discovered through other innovative techniques, such as blogging. The best stock possibilities are frequently found through non-traditional information sources—that is, sources other than Bloomberg, Reuters, or any of the numerous clearinghouses for financial information that large Wall Street corporations pay thousands of dollars a month to access. The trick is to know where to look for it because most of the best information is available online and for free.

Generally speaking, would you rather go to a young person or an older person for assistance when you have an internet-related issue that needs to be resolved? Examples of these issues include web design, improving your website's search engine rankings, starting a blog, understanding how to search online databases, and more. A new child, isn't that right? Due to the fact that younger generations are usually far more knowledgeable about emerging technologies, including how to locate and modify data. Can you now see where I'm headed with this?

The reason that portfolio managers and financial consultants at large financial services firms won't tell you about the companies that, in five years, will be the next Microsoft or Dell is because these large financial institutions still don't understand that the best stock pickers' repeated success in picking stocks no one else has heard of is a result of their ability to use information technology to source information. Furthermore, if your financial advisor suggested an initial public offering (IPO) that performed exceptionally well since everyone was aware of Google, don't be impressed. Your financial advisor need to be locating the countless additional Googles that are out there but that no one else is aware of.

To be honest, I don't give a damn about how frequently the senior portfolio managers of large investment firms visit the businesses whose stocks they suggest. If these top portfolio managers have "access" to these companies' CEOs and CFOs due to their "reputation," I could care less. The "global reach" of these investment firms, which allows them to investigate foreign companies, is of little concern to me. As a client, I'm not impressed by any of this.

I don't really care because large financial services organizations typically don't do enough due diligence on the proper companies. I refer to these as the obscure small-cap stocks that no one has ever heard of. Despite the fact that the large firms will spend tens of thousands of dollars to host these conferences for their most important clients in opulent hotels and flaunt their remarkable access to CEOs of major corporations, I would much rather spend almost nothing on continuing to find stocks that will yield 50% returns in less than a year than waste my time on meaningless talks about a massive company that will never grow by more than 8% annually. However, that is simply my viewpoint.

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