Blog : Important 6 Minute Message

Please bear with me - I need to explain something very important.  

This quick story will be important to you, just like it is important to me.  It just may change your entire outlook (and I hope it does).  

There are a lot of moving parts to any system.  This is true whether we're talking about the overall American economy, the moves in the stocks which make up the markets, the way that a car engine works, or how digital news moves around the country.

Typically you don't need to understand how the thrusters on the space shuttle work.  For most people, all that is important is to understand the basic concept - they need fuel, and ignite it to provide the propulsion (I suppose?).

Likewise, you do not need to know how a flower grows, or a jaguar is born, the way in which the United States President is selected, or where plastic comes from.  Typically it's good enough to have a basic understanding.

Please bear with me for just one more minute. We are about to get to the point of this important message, and the ways in which it will alter your approach for the better.

For example, most people have very strong opinions about who should and may become the next President of the United States of America. (This article is NOT about the election, it is just being used as an example to demonstrate a point which we are going to be getting to).

However, the vast majority of us do not understand the process in which the Electoral College works.  By extension, most people do not understand the manner in which the next President will be chosen.  For most of us, we see a headline or two that a certain candidate is ahead in the polls, and base all forward-looking assumptions on what we heard from the TV.

Even so, most people will vote.  They will argue their friends and relatives about their opinions, and fight about soundbites which they may have heard on the media. At the end of the day, they will feel frustrated if their candidate does not win, or elated if their choice rises to the top office.

As another example, the vast majority of people do not understand the manner in which the stock market works, or the price drivers which move the underlying shares. Unfortunately this leads to many people losing money, or making poor investment choices.

Thinking subjectively rather than objectively, most people will make trading decisions based on a soundbite they may have heard, or a personal opinion, or even a certain level of desperation to make a few bucks and pay their bills.  Too often their buying decisions are driven based on a very shallow concept such as, "solar power is a good idea, so investing in solar power stocks is a smart investment."

I once heard that you should only trust in the guidance you get from people who are doing very well (or perhaps "financially better" than you are yourself).  I have always agreed with that theory.

Now, anyone who knows me, knows that I absolutely am not a "bragger."  I am a very humble guy, with an excessive amount of perspective on what's really important in life (and it ain't money)!!

Sure, I enjoy being on camera if I can help people avoid some of the mistakes that I made when I got started (which is exactly why I wrote the "Penny Stocks for Dummies" book).  But, I still feel like I need to clarify my position before I make this next statement, so that it is not misconstrued as being "showy" or "braggy."

I've had nearly 20 years to be a showoff – if I haven't done it yet, I'm not going to start now.  This is also why this next comment is buried so far down in this article, rather than at the very top as many people in my industry would do (if they could back it up)!

I'll get to the point – I own 3 houses. I have no mortgage on any of them. 

My hope for you is that out of this fact, you recognize that maybe I know a little bit about the concepts I discuss. I leave that for you to decide, but I would suggest that you at least take a few minutes to read everything I discussed in this blog entry, if not to watch the videos we produce, the other articles we write, or the penny stock picks we make for subscribers (which could include you, whenever you are ready to change your life trajectory).

Back to the main point, just like there is no point in voting if you live in Texas or California, because the outcome of the election from those States is already determined (they will go Republican and Democrat, respectively) - people will still vote in those States.  

In the same vein, there are so many abstract underlying influences which stack the stock market odds against the individual investor... which they do not understand.

In fact, it's not that they don't understand, as much as they don't even have any concept that these subtle influences exist. For example, a company can be in a growing industry, and be doing absolutely great operationally, but the shares can be diluted at the exact same time by the management team issuing more stock in the company.

So while the company doubles in size and effectiveness, their base of available shares may also double.  This will go unnoticed by most shareholders, and will result in the underlying stock remaining at the exact same price despite all the successes.

To swing back to our example of how an engine works (I told you this was not all about Politics!), mechanics will always have an advantage when car shopping. They will understand what to look for, they will understand the meaning of that strange noise coming from beneath the hood, and they have a concept of how much longer the vehicle will last.

If two people go to a used car dealer, and one knows nothing about engines, and the other is a mechanic, the latter will almost always drive away with a much better deal. Besides just understanding the way the vehicle functions, they can also use the knowledge they have as a tool for negotiation with the salesperson.

So what does this mean for you? 

I'll make some assumptions about you, I hope that you do not mind.  Please understand this is not a judgement, and may not apply to you:

you're probably (although not necessarily), one of those investors who is acting on significantly thin due diligence.

I doubt that you are buying and selling stocks all willy-nilly, but rather basing your decisions on a few concepts or points you may have been exposed to. However, the majority of investors trade stocks based on very flimsy and shallow theories, and as such are typically confused when they are not turning their small amount of investment dollars into something much more significant.

For example, if you were to hear that recreational marijuana is going to be the next big thing, it makes sense to invest in companies which stand to gain from the shift in social trends, right?  However, too many people have the same idea.

People get far too aggressive about the strength of the underlying idea.  This results in investors driving the prices of the underlying companies towards ridiculous valuations... from which they will soon crash.

The problem with ridiculous valuations is that you're paying too much for the stock, and are almost certainly going to get burned when the shares return to a more realistic level. In fact, we've seen this play out recently with the recreational marijuana boom specifically, with many of these extremely tiny companies suddenly being valued for as much as a half billion dollars.

I don't want to ruin the ending, but I'll let you guess how that all turned out. It was no different with the Dot Com Bubble, in which we saw Internet companies like Pets.com trading into the stratosphere - despite the fact that they had no way to consistently generate any source of revenues that would overtake their expenses.

I know I'm stringing you along here a little bit, but bear with me one more second because we are about to get to the whole point of all this.

Considering what it would mean to you to take a small amount, and consistently understand how to turn that into something much greater, it should be worth your time to delve into a little bit of additional due diligence. In fact, if taking a few extra steps and an additional 20 minutes with each stock market trade could make the difference between breaking even, a loss, or reaping significant profits, it stands to reason that doing the extra effort will be more than worth it.

The great news is that it's actually very simple, and within a few minutes of learning some concepts, you will be able to apply these for the rest of your life!  You can (almost) make sure that you're not getting involved with stocks which will decline in value.

Think of it like taking a brief tutorial about how an engine works. You don't need to become a mechanic, but when someone explains to you the important aspects, you will benefit from that for the rest of your life.

For example, it's very easy to check on how much money a company owes compared how much it owns. Just by taking a couple minutes to do that, as explained in this video which I made for you (How To Find Top Penny Stocks - 5th one down), you would be immune to the major losses that we saw rip through the stock market from things like the Dot Com stocks, the recent pot penny stock craze, and even what we are currently seeing from a company like Tesla.  

(Don't get me wrong, I love Tesla, their technology, and what they're trying to do.  However, they absolutely cannot afford to pay what they owe based on their current business plan. This is true whether you like it or not, but at very least it can be used as a massive opportunity... one which could result in you creating enough profit to buy yourself a brand-new electric car)!

You could almost avoid being hurt by investment decisions which are based on too subjective, or too small an amount of information. However, what is happening is that lately there are just far too many distractions, which cause people to not keep their "eye on the ball" so to speak.

Between:

- the latest comments from OPEC
- the upcoming Presidential Election
- the new stock market highs
- the ongoing discussion about whether or not the Federal Reserve will raise interest rates
- the ballooning national debt which is mathematically unpayable
- Kim Kardasian
- war in Syria
- worldwide negative interest rates... 

... most people are not even looking at the important price drivers for their investments.

These are just some examples among dozens, each of which is feeding into society's need for constant distraction, and instant gratification.

When I am having a frustrating day at work, I often turn to my iPhone, and play chess against the computer. This gives me a sense of instant gratification - if I win, I'm happy and keep playing, if I lose, I'm frustrated and keep playing.  

This all takes my mind off the other issues which make up the bigger picture.  Sadly, even if I win 1,000 chess games in a row, I have really accomplished nothing.

With mobile phones, and games like Angry Birds and Candy Crush, and now Pokémon Go, this situation has been getting worse and worse.  Add to it the barrage of meaningless news that you might see on CNN or in the headlines of the local paper.  The vast majority of people can exist, achieve the feelings of progress and success, and make (bad) decisions without ever looking at the big picture.

This has set up a situation where far fewer people are actually looking at the factors which are truly moving the price of stocks.  As such, greater and disproportionate gains are finding their way into the hands and pockets of a much smaller facet of the investing community.

In other words, a very small proportion of investors are making vast majority of gains, while the majority are taking losses. Now, here is the entire point of all of this blather you have been sitting through (and I commend you for still being here, because the very few who took the couple of minutes to read this content are now the ones who will get the benefit from it):

There is very little difference between the minority making big gains, and the majority taking the losses.

To move from that second group, and into the first group which is making all the profits, takes very little time and effort.

I can help you get to that point with some free tutorial videos and articles, or you can learn how to go about understanding the real, true price drivers in penny stocks, on your own with a little bit of guidance from my team and myself.

Of course, I wouldn't be doing my job if I didn't suggest that you let us do all the work for you!   This offer might not be for you, but for $199 my team and I will screen through thousands of penny stocks, put the best ones through our in-depth Leeds Analysis process, and report our top trades to you every week.

You also see our full analysis report on each company, along with short-term and long-term buy and sell opinion prices. And of course, all subscribers will get a few extra bonuses as well, such as:

- My personal trades and holdings
- Special market insights
- our special strategy letter
- the penny stock cheat sheet

As I've said, the subscription is not for everyone. However, if you are a busy person, and want to trust someone who's been doing this for decades, and has an entire team with extensive experience in the field of penny stocks, then at least consider taking a look at all the things that we can offer to you.