BUY WHEN THERE IS BLOOD IN THE STREET…

Warren Buffet once said, “Be greedy when others are fearful, and be fearful when others are greedy.” Although it’s simple and provides clear instructions, most investors find it too emotionally taxing to follow this prescription.

The problem is that most are standing too close to their money, missing the decimal point. When you watch every single tick daily, you are subconsciously committing premeditated murder of your money.

Mentally, you are looking at the chart, trying to find comfort in the support levels, saying to yourself, "There is plenty of support at X; it should hold."

What you have done is unconsciously anchored yourself to a sell order—if and when it hits support.

Now here is the rub…institutional traders are watching and gathering intel on what may be your exit point and their liquidity trap.

So, they already understand that if they pressure the stock down to where your money will scream in agonizing pain, you will do the reverse and pay with your losses to leave the club.

But wait…weren’t you screaming, the stock market was your ATM cash machine, “let’s print money baby!”

What happened to…as you kids say, “standing on business”?

Well…Mike Tyson did say, “Everyone has a plan until they get hit.”

Simply put, if all it takes is for the fear and greed index to register extreme fear for you to jump ship, getting wealthy in the market may be a stage in your life, like puberty, instead of an actual reality.

How about zooming out on a weekly or quarterly chart or looking at the last 50 years on the Dow and the S&P 500? And tell me what you see. Which direction has the market gone regardless of crisis, wars, inflation, and uncertainty?

Come on, spit it out. UP—yeah, now you’re tracking.

Now, the next mental adjustment is to add the ingredient of time…notice I didn’t say timing. The mere thought of timing suggests unrealistically high expectations that have filled many of the financial graveyards with dead money.

In fact, timing the market is fool’s gold.

There was a study done by Charles Schwab that included four investment styles, investing $2,000 per year. The first investor—somehow, miraculously timed the market perfectly and bought the market at the lowest point every single year.

And before you get excited, this is a hypothetical example—don’t get your panties in a bundle.

The second investor didn’t waste time trying to time the market. Instead, it was like a no-look pass straight into their investment account as soon as they got the $2,000 (which is my style, by the way).

The next investor was the top ticker. They were either dreadfully unlucky or a high-speed chaser because they purchased the market at its peak every single year.

The last investor was scary Bob; he decided to sit out the market and ride it out in treasury bills—paranoid by the thoughts and the voice in his head, whispering in his ear, “The market is going lower, just wait….”

Well, you know what happened to his money, the only thing it grew was whiskers with a measly $63,851 in 20 years. On the other hand, the perfect timer came out ahead with $173,836, which is an obvious oxymoron, since there is no such thing.

Being a perfect timer is the story that Generation Z sells themselves before realizing that a hard head makes a soft behind. In this case—a blown-up account and a broken spirit.

The top ticker managed to eke out $141,572, even though they fell on their sword every single year, which goes to show you there is no such thing as a bad time in the market, just bad timing.

Now, the last investor was reliable Billy. He dollar cost averaged for 20 years straight and never wavered. He never tried to time the market. He never got scared and sat on the timeline…and he purchased every week no matter the price.

So obviously, his account came in 2nd place to the perfect timer, which in reality is first place, since we all know that timing the market perfectly is completely unrealistic. Reliable Billy smacked it out of the park with $161,191, which aligns with the long-term charts on all major indexes over the last 50 years.

There is no magic bullet to investing, just great stock picking or owning the right index or ETFs. The keys are patience, dedication, and discipline. If applied to the correct plan…time is a multiplier.

But if you try to gamify your return and play against the clock…that’s a sure recipe for money destruction.

NO COMPANY GOES UNTESTED…

Mark Twain once stated that history doesn’t repeat itself, but it often rhymes.

This comes to mind when I think of the enthusiasm that is placed by the new investor in the Magnificent 7.

Being both a student and a history buff, I find it necessary to draw on history’s past to seek clarity and objectivity to refine my current Investment thesis. While I agree that history doesn’t rhyme, it is quite a handy measuring tool.

Case in point…most retail investors are of the thinking that if they just keep buying the Magnificent 7 there is nothing in the world that can possibly go wrong? —which in today’s climate seems like a no-brainer. They have the biggest balance sheets, and the most dominant market position, and collectively—as of December 31, 2024, between them all, they have approximately 468.56 billion in cash and cash equivalents on their balance sheets.

• AMAZON- 101.2 BILLION

• GOOGLE - 95.65 BILLION

• META - 77.81 BILLION

• MSFT - 77.55 BILLION

• APPLE - 53.77 BILLION

• TESLA- 36.6 BILLION

• NVDA - 25.98 BILLION

With that much cash, unless they are wiped off the face of the planet by a meteorite, they should be fine. But this doesn’t mean that their positions are assured through history; the baton has changed hands quite frequently.

In 1955, General Motors was the largest company and most profitable in the world employing 877,000 at its peak.

Coming from humble beginnings, General Motors began as a collection of small automakers, inclusive of Buick and Oldsmobile—yet, was no match for the 800-pound gorilla, Henry Ford.

In 1921, Ford produced an astounding $75 million to $100 million in revenue per year. Meanwhile, GM quietly went from selling 12% of all automobiles sold in the U.S. in 1921 to outselling all automakers in the United States combined—capturing a 52% market share by 1954 and going on to be the most dominant and largest auto company from 1931 to 2007, surpassing the once unbeatable Ford.

In the stock market, nothing goes up in a straight line and nothing goes down in a straight line. Think about International Business Machines, better known as IBM.

As a technology company, it’s extremely difficult to make it to the top of the list of greatest companies and it’s even more difficult to stay.

For 30 years, IBM was once considered the largest computer hardware and software company globally, dominating all challengers.

Competitors from NCR, GE, RCA to Honeywell were all punching above their weight class and getting destroyed. IBM was the first big American company to develop a complete corporate identity and design program, which touched everything from office buildings and notepads to the computers themselves.

IBM hired top designers and was a great place to work, peaking at 400,000 employees in 1980. I remember when I first entered Wall Street; IBM was a staple, like buying Apple today became.

In 1993 something went wrong; IBM recorded an $8 billion loss—the largest in US history. It fell out of favor for years before reinventing and re-energizing itself under the leadership of Louis Gerstner, making it a thriving concern still today.

This goes to show you what is new, becomes old and out of favor, or drops from the top spot quite easily, especially in technology as it moves at the speed of light—and what is considered a miraculous breakthrough can be superseded by the momentum of its own success.

My last example is what was called the Nifty Fifty. The Nifty Fifty traded at high valuations in the 1960s and the 1970s. The roster consisted of companies like Polaroid, IBM, XRX, and Coca-Cola (KO).

Because of their proven results and continuous dividends, investors were told to buy and never sell. They called them one-decision picks—the true meaning of set and forget it.

The Nifty Fifty traded at a multiple as high as 42 times earnings, peaking in 1972 before getting smacked into reality by the bear market of ‘73-’74.

History tells us that the market will reset if it gets too far over its skis.

And the companies that once dominated will lose to the lack of innovation and outright better competition, while companies like American Express, Johnson & Johnson, Walt Disney, Procter & Gamble, and PepsiCo, are still excellently run companies that still exist today.

Companies like Xerox who have lost their footing and Polaroid who are missing from the face of the earth. The S&P 500 was trading a half of the Nifty Fifty of 19 times earnings. To make matters worse, investors were pumping up pricing based on only an 11% growth in earnings paying 42 times for every dollar in earnings.

This is eventually what led to a disastrous decline of the Nifty Fifty falling into the reality that a good stock isn’t the same as a good stock, so in other words, just because it’s a high flyer doesn’t mean it will not get shot from the sky.

Now, eventually, the Nifty Fifty recovered and the buy-and-hold investor would have averaged an annual basis of 13% had they held, but for those who sold, they lost their shirt.

The takeaway is twofold here—(1) technology is forever changing so be careful who your money marries and (2) when the market goes down and you own quality stocks, the investor that buys and buys some more (DCA) instead of just sitting on their hands praying for a new beginning, wins the race by 100 miles.

So while the Magnificent 7 provides comfort to new investors, take a hint from the Nifty Fifty—no company goes untested.

FOOL ME TWICE SHAME ON ME…..

So, on February 25th Super Micro Computers delivered its 10k and back quarterly filings on time to meet the Nasdaq delisting requirements—and the stock jumps 22% in the premarket.

The question remains…should you trust the stock or more direct, the leadership? This is the second time in the company’s history that they had accounting issues—once in 2018 and its current state.

It’s been my experience that once the street loses focus due to the numbers, no matter what the short-term pop in the stock price would have you believe, the real money has left the building.

The trading fate of the companies is left in the unstable hands of the retail investor. It all boils down to, whether can you trust the numbers, which ultimately translates to, can you trust the data?

As I have stated earlier, there is a difference between a good stock and a great company. A good team can win a championship, but a great team can build a dynasty like Michael Jordan’s Bulls.

And trust me, Charles Liang is no Phil Jackson.

To get 13 rings—2 as a player and 11 as a coach, you have to be a special type of leader. The team also must be amazingly talented with unmatched synergy. And since we know that a corporation will rise and fall based on leadership, a true leader is accountable and understands that if his team wins or loses, it’s his fault.

On a previous conference call, analyst Nehal Chokshi, with Northland Capital Markets, questioned Charles's leadership by asking if he would split the CEO and Chairman role, which was an indirect way of saying we don’t trust your leadership and perhaps you should step aside from the day-to-day operations.

Samik Chatterjee of J.P Morgan asked if they were pursuing any management changes, as in a New CFO, which was a polite way of saying someone needs to be fired.

The question that must be answered as a long-term investor is, will slapping new lipstick on an old pig change the perception of faulty leadership and failed accounting oversight?

Take a quote from the movie John Wick, “as you do one thing you do everything.” So how do we trust your guidance?

The famous motivational speaker, Les Brown, once said, “If no one believes in you, they will not believe you.”

What type of leadership lets accounting blemishes scare their company, not once but twice?

This speaks directly to the competence of the leadership, and once we start questioning competence, we start questioning everything from the senior leadership in the C suite, their decision-making, the validity of their guidance, to the talent of the sales force—not even the janitor escapes scrutiny.

It’s truly a matter of John Maxwell’s Law of The Lid. When he states that if your lid is a 6 in leadership it’s impossible to lead a 7 or higher. So, if you have a leader who ranks as a 10, he is capable of leading 10s or anyone below them, but when you have a low leadership IQ it will be hard to attract talent.

In fact, you may lack sufficient skills to be able to recognize talent; therefore, you are effectively the sheep in leadership trying to lead lions, which leads to outcomes like poor accounting oversight.

It also speaks to your company and leadership team being able to execute. So, even if you have the best product, the trust factor based on your teams' inability to deliver may lose more sales than your best-in-class product will keep.

Let’s face it, eagles don’t associate with chickens so if you are the chicken in this example, there is only one eating at this table, and the one that is not eating is being eaten.

And it is because of my experience and belief that both success and failure leave clues. I would rather put my money in the hands of leadership I trust.

It’s as simple as answering, would you let a stranger babysit your children? So, without overstating the obvious, Super Micro Computers may in fact win, but they will have to do so without my family as investors.

SCHOOL, IS THE LEMON WORTH THE SQUEEZE…?

Question…strictly from a debt versus reward—is college worth it?

Now, before I enlist the elitist, picketing in front of their computer screen with their lamb skin on a stick…I am truly asking…is the lemon worth the squeeze? Now, you might find it argumentative, but I think of only two paths when it comes to schooling…trade school and Ivy League education.

Of course, there is the entrepreneurial school of hard knocks, but when I think of the opportunities that spill from trade school and an Ivy League business education—although two extreme directions, I believe the benefits outweigh going to a traditional college and wasting money on a major that can’t even pay off the incurred cost.

For instance, if a person becomes an electrician, this opens the door to a stable paying job (60k average) and solid career without the debt load, considering the average cost of a trade school is only $5K.

Where comparably, the average four-year college education can cost 100k to 250k. So not only is the debt load 20 to 45 times higher, but the average college graduate only makes a $44,512 per year income.

Tell me where this makes sense, financially. Why bury yourself with debt that by the time you pay off could cost up to 250k to 500k with interest?

In fact, according to Glassdoor, the average trade worker in the United States makes $85,373 to $147,000 depending on where you live. So not only is the juice worth the squeeze, but if you invest and live a modest life, you can afford to build a retirement that is befitting your expectations.

It used to be that people stayed on jobs for 30 years; today the average person changes jobs every four years and has 12 jobs before the age of 50. This doesn’t bleed into a successful career. At least with a trade, if one day you decide to start your business you know your business.

Now, an Ivy League school education presents a totally different reason and goal.

The average Ivy League school education cost is definitely not the reason why you go to an Ivy League school; it’s more about the rolodex of connections and the ability to achieve leadership roles in publicly traded companies, or acquiring access to a playing field that’s just not reachable in the average college or university.

This is my preference for my children—it’s about the relationships and access to big business that may contribute to the success of the business or businesses they might want to build in the future.

My message to my children will be to go to schools for the tools they need to build their last name. And make sure the school you attend has all the resources necessary, including the people capital you need to achieve your vision; which leads me to ask, what type of conversation are you having with your children?

Are you educating them about the differences between being a consumer and a producer? If we fail to have this conversation, we fail our children, in my opinion.

Knowing how to play the game at the highest level should be taught at the early stages, just like chess—investing and the importance of commitment, discipline, consistency, and accountability.

If we don’t teach our children, society will. The goal is to give the next generation an early education in the understanding of money so they don’t worship it or misuse it.

Spending money drives the economy, so the goal of the system is to turn you into a producing consumer making you a contributor to GDP (Gross Domestic Product).

Being a consumer is how you rob your family’s last name of prosperity. Learning how to produce a product or service, and market and build platforms to distribute those products or services, are key to the independence of your family and quality of life.

This doesn’t mean you will work less; in fact, you will work harder—the choices you create will enhance your life and the lives of generations to come.

In conclusion, higher education is important but simply following the whims of the societal conveyor belt leads to a dead-end street where legacies aren’t built, they are destroyed by choosing the wrong path in life.

NO SUCH THING AS GETTING RICH QUICK…

On any given day, if you sit around the water cooler you will hear people whispering about untold riches —to be had through multi-level marketing schemes, Bitcoin, the Forex markets, and the marijuana industry.

Whether it be 5Linx, ACN, Amway, or the phenomenal gold mine in the CBD oil industry.

Multilevel marketing and money schemes make their way through the impoverished communities like Friday night fights and gossip in the neighborhood barbershop, sniffing out their next recruits' monthly membership.

Everyone wants to get rich quickly, but no one wants to read the fine print, because had they, they would have quickly discovered that for them to make money, it requires someone to move up or pay up.

These schemes are all in the wheelhouse of the failed wantrepreneurs because getting rich resides in the clubhouse with the problem solvers and the pioneers. There is an old line I would always say to new recruits when I had my insurance agency—to have high expectations without high preparation leads to low or no compensation.

Only those who lack the correct information or don’t have the desire or drive allow Ponzi Schemes to capture their imagination. The hook is usually fortified by an unanswered desire or dream deferred; therefore an unsubstantiated amount of integrity is placed in an unproven process based on little or no result.

Just ask yourself…how many millionaires do you know from the CBD oil multilevel marketing craze? Now, if you are the owner of a dispensary then we are having a different conversation.

And even if this is the case, you need between $750k to $1 million to get started—and that doesn’t include the application fee, which can run as high as 5k or even more depending on the state—and that’s just for the license approval.

In addition, your annual license fee could range depending on the state, anywhere from as low as $1k or north of $10k. Annual real estate costs can run between $40k to $150k, depending on location and competition.

And since marijuana is still illegal on a federal level, finding a so-called marijuana bank that will do business with you can cost upward of $24k a year in fees. This does not include at least a $250k payroll for staff and budtenders.

Now, you’re going to need a fully compliant point-of-sale system, security system, and products to sell. Electronics may run $25k and stocking your shop with quality products could cost $1.5k per pound.

Now, let’s take on another $25k for operational and advertising costs. Let’s not forget the heavy-duty regulations, so you need an attorney on retainer, so that cost could be over $50k.

Not to mention the type of leadership leading the company—because the company will rise or fall based on the quality of leadership.

Now with this being said, there is a huge difference between being an owner of a dispensary with capital requirements versus the short money thinkers looking for a big score in some multilevel Ponzi scheme, based on how much weed you or the people around you smoke.

Bitcoin is no different. Had you owned Bitcoin back in 2013 when Bitcoin was trading as low as $13.50 per bitcoin—depending on how much you owned when it peeked out at $19k in 2017, one hundred bitcoins would have been worth $1.9 million and $10 million in 2024.

Now, for those who kept their passwords and were lucky enough to be in the right place at the right time, they scored.

But for the countless others that rushed into the Bitcoin craze in 2017 and purchased at the high and fell to the mercy of supply-and-demand, they were crushed by the hype and their greedy intention.

And even though Bitcoin made its second appearance in 2020 and third in 2024, many of the burn victims were burned beyond recognition.

As I’ve said many times before, on Wall Street one thing is for certain—when the regular average Joe is talking about how great an investment is, that means the smart money has come and gone, so in not so many words, it’s too late…the ship has sailed.

Now Forex trading or currency trading is a totally different animal. While I’m sure there are quite a few who trade currencies successfully, the vast majority fail. First off, there are too many risks involved for the amateur investor, let alone the average Joe who doesn’t know the difference between an economic risk and a political risk.

Plus, if you are dealing with foreign currencies, the exchange rates will affect your outcome.

And…unless you have all day to sit in front of your computer and watch the trades, as well as economic and geo-political news—that will affect your daily profit or loss potential. It is not for Aunt Ethel, in the beauty salon.

This may be a bit out of her wheelhouse.

Add to the fact that they allow you to leverage up to 400 times your money, which in the beginning seems like a great idea because it attacks the greed central nervous system, which places you in the something-for-nothing category, but when the leveraging goes the other way, it’s a double edge sword.

Next, it requires you to have a superior amount of discipline and money management skills. This, I find amusing because it’s an oxymoron of sorts—usually those who are looking to get rich quickly have no discipline and not enough money to manage.

So therefore, they are truly playing with the diaper money, which leads to irrational emotional behavior throwing the discipline needed to be a trader out the window with the baby and the bath water.

When you are emotional, it will be the thief of all profits because you will almost 9 out of 10 times make the wrong decision and, in the end, may potentially cost you more losses than you can stomach.

This coupled with greed makes the shortcut in life the long route, and unfortunately, a dead money dead end for most.

For those lucky enough to have learned their lessons and are looking to do it the right way, the best way to start investing may be by maxing out their yearly contribution, 401k, and 403b plans at work.

This will minimize the risk for the amateur investor trying to get ahead. If you are 50 years of age or younger, your maximum contribution as of 2025 is $23.5k.

If you are 50 years or older, you are allowed the same $23.5k plus a one-time catch-up payment of $7.5k for a total allowable contribution of $31k. Your next step will be to start reading up on what types of investments are suitable for your goals.

For example, if you are younger and feel that you can stomach more risk than someone approaching retirement, then you may want to start investigating individual common stocks or growth companies that may afford you a higher growth opportunity over a longer period.

On the flip side, if you are conservative and are looking for safety and income, you may want to sit down with a financial planner and discuss annuities, dividend income streams like dividend electronically traded funds (ETFs), as well as bonds.

While this may not get your blood rushing like the fast-paced anticipation of quick money, it definitely will not give you high blood pressure.

Paul Samuelson said that investing should be like watching paint dry or grass grow. If you want excitement take $800 and go to Las Vegas.

 Quick Links…

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Bitcoin Reserve talks….

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Kevin Davis Founder of Investment Dojo and Author of The C.R.E.A.M. Report