We invite you to join us every week as we research and analyze the best risk-to-reward opportunities we discover in the financial markets. We'll discuss the intel we gather, our investment plans and market analysis, and provide timely lessons, trainings and strategies which could have the biggest impact on your investment accounts. You will also learn and discover the unique way we utilize Margin of Safety Investing and Special Ops to generate superior returns with less risk.
The Margin of Safety strategy we utilize with Investment Intel is how we look to allocate up to 80% of our portfolio. It's based on the two main principles to successful investing—the ones that have been the foundation of high returns for the last 100 years:
1) Buy high-quality, well-managed companies
2) Buy companies only when they are on sale
The Special Ops strategy of Investment Intel is for those unique opportunities when various financial markets are providing extremely high potential upside. We look to allocate as much as 20% of our portfolio to these Special Ops.
Our in-depth analysis and extensive research allow us to uncover the best opportunities—and clearly communicate with you how we will capitalize and profit from them. The Special Ops strategy opens our accounts up to large potential gains across a wide variety of global financial markets.
Less Risk. Lower Fees. Higher Returns.
Investment Intel consists of an elite group of investors who are able to realize consistent and strong returns without the need to take on elevated risk. Students who successfully utilize the strategies discussed are capable of generating in excess of 12% annualized investment returns for the long-term.
That’s a bold statement—we know. Here’s why we believe that to be true…
Our investment philosophy, which we use throughout the Investment Intel webinars, Digests and members' area is two-fold. It consists of two components which complement each other in a way that greatly reduces risk, while giving us enormous upside potential. These two components are what we call Margin of Safety Investing and Special Ops.
The first and primary component of the philosophy—how we invest and how we teach clients and students to invest—is by utilizing the Margin of Safety Investing strategy.
This strategy began with our desire to employ an investment philosophy which could provide us realistic potential for big-time growth and sustainable returns, but didn’t require us to take on a massive amount of risk in the process. We didn’t want to just get the average return that the stock market or the bond market offers, because we saw from the many clients we worked with, that the average return, after paying management and investment fees—was not working out for most of them come retirement time. They were losing so much during recessions and big market drops, that the traditional buy and hold strategy just wasn’t giving them the results they needed over the long haul.
And it just so happens that some of the world’s greatest investors had already figured out the strategy we were looking for—we didn’t have to make this up or create anything. We’ve diligently studied and learned lessons from some of the best and most profitable investors in the world who have paved the way and already proven what works. From there, we’ve fine-tuned it to make it applicable for us and our students. The lessons learned are what formed the basis of what has evolved into our Margin of Safety Investing—which essentially means that we only buy understandable, excellent, and well-managed companies at attractive prices.
It’s that simple. This drastically reduces our risk, while simultaneously greatly increasing our upside potential for profits. We’re not as exposed to massive market drops, and we’re well positioned to capitalize on big price gains when they do happen. We’ve developed a process where we’re able to spot these excellent companies, and determine valuation methods for purchasing them only when our risk is low and upside potential is high.
Become a Business Owner Through the Stock Market
Through our own studies and examining many others, it’s become apparent that having an ownership stake in a few, great businesses is the best path to building wealth over the long-term. Owning businesses which consistently compound profits is the most powerful tool for safely accumulating a fortune. And that’s what we set out to accomplish with the Margin of Safety Investing strategy. Every investment we make is analyzed the same way as if we were buying the entire business.
Because that’s what you’re essentially doing in the stock market; each time you purchase a stock, you are buying a portion or a share of the future earnings in an existing business. Well we can gain ownership in some of the best businesses in the entire world, managed by the best CEO’s in the world, by investing in the stock market, and picking and choosing which businesses will best serve us in building our wealth going forward. It’s essential to understand that when we’re buying stock in a company, we’re not just simply buying a piece of paper—we’re becoming part owners with a stake in the future of that company. So we need to be able to pick the right companies. And that’s what we want to help you to be able to do too—to be able to buy the right businesses at the right prices in order to build your account values.
Let that absorb in your mind…this is an amazing opportunity. When buying companies available in the stock market, here’s what you have: the business infrastructure is already in place, they have a proven model, they’re making money—and all you do is choose the best ones and wait for the right price. That’s what the margin of safety concept is all about. You don’t have to come up with a business plan, raise the funds necessary to launch your business, hire the executive team and additional employees to manage and execute your business plan, and make all of the contacts required in taking your product or services to the market place. You get to buy these existing businesses that have already proven themselves to work in the form of an ongoing, very profitable business. The work has already been done for you. And Margin of Safety Investing aims to find these proven, wonderful businesses—buying them only when they go on sale.
And the key point to understand is…the prices of these businesses, or stocks, really do become attractive, or even go on sale from time to time. You don’t need to overpay, even for the world’s best companies. The foundation of this entire strategy is based on the fact that the price of a stock is not always indicative of its’ true value. That’s a very important reality in the market. Market participants WAY overreact to both good and bad news—and these overreactions create profit opportunities for us and all the other investors who realize that price does not always equal value.
In the long-run, the stock market is efficient—meaning that the price in the marketplace roughly equals the true value of the company. However, in the short-term…and this part’s the key, the stock market can become inefficient—meaning that the price in the marketplace can get out of whack with the true, value of the company. This is because of those overreactions to positive and negative news, like we said—news from companies, industries, the economy, etc. Spotting these discrepancies, or inefficiencies, are how we capitalize. Our deep research and long time horizon allow us to pounce on attractive prices when we know what to look for.
Now here’s the challenge with investing in the stock market today: too many investors are unknowingly buying and selling these businesses at the wrong times…at the wrong prices. And this goes for individuals, but it also includes nearly all financial professionals. Whether through managed funds, ETF’s, or their own stock picking, they are doing most of their buying at the top of markets…following the crowd…with no solid methodology or strategy to rely on. They don’t understand the whole “buying a great business at the right price” concept…or at least they’re not paying attention to it. They are simply speculating, with nothing but hope that the market will somehow keep going up, or at least shoot up when it’s time to retire. And this is no way to do it…we’d rather you “invest with certainty as opposed to speculating with hope”
And then here’s the other problem: most people (individuals and professionals alike) sell when the market has dropped significantly…just as prices start to become cheap and fear in the market is rampant. And look, it’s human nature to want to buy with the crowd as everyone is driving prices up and analysts are shouting that you can’t lose…or conversely to want to sell with the crowd as everyone around you is dumping stocks. But here’s the problem—it turns out that’s exactly the opposite behavior needed in order to realize the biggest and safest gains in the stock market. Following the crowd in and out of the market equates to realizing the same results as everyone else…not very impressive. We flip that bit of human nature on its head with Margin of Safety Investing and WE attempt to buy when individual stock prices are low relative to valuation, and to sell during periods of euphoria when stock prices are high relative to valuation.
This might sound too simple…or too good to be true, but it’s exactly what the wealthiest investors and business owners have been doing for the last hundred years. It’s possible, because the market—at times—becomes irrational…(like we said before) participants overreact in huge ways to both good and bad news. Price doesn’t always equal value. This same behavior has been happening for years in the stock market. This creates fantastic opportunities for us, and we’re able to pinpoint those times when the probability is strongly in our favor. We make infrequent, high-conviction, high-probability, and low risk investments. Over and over again.
This translates into buying with a built in margin of safety—which is where our strategy got its name. We could be wrong about the future, about the growth rate, about the state of the economy, or any other metric—but if we buy with a built in margin of safety—buying great businesses at good prices—then we could be wrong about a whole lot of stuff…and still make money. Now that’s how we minimize the uncertainty.
So…you might be wondering why we’re bold enough to say that we, and you, can beat the market—and generate returns in excess of 12% annually. And really it’s very simple. You and I have two BIG advantages over the majority of participants in the market. First, we have the luxury of being in and out of certain stocks only at the most opportune times. And second—individually, we are dealing with relatively small amounts of money. Because of this, our transactions don’t really impact the market price of the stocks we are buying and selling—and certainly don’t impact the entire market. And by small we mean an account size under $10 million dollars or so. The big funds, banks and professionals—the same ones that are handling a large majority of investment and retirement accounts across the country—don’t have either one of these advantages, and this handcuffs them and their returns. It’s where we get our edge.
We can wait for the fat pitches, or only the best opportunities before employing our money. We don’t have to force investments, overpay, or be exposed to big drops. This first advantage is huge. Funds and Investment Managers which control the market have to remain mostly invested—even when the time isn’t right—even if they know the time isn’t right, such as periods of extreme overvaluations. Their prospectuses dictate the types of investments they can make and the maximum amount of cash they can have at any given time. And they have to be taking action, or else they couldn’t justify their high fees.
And then, the billions of dollars they need to invest at any given time can literally move the market against their positions. They can’t buy and sell with the same precision that we can, because they are moving so much money. These institutions make up the majority of the market, and therefore find it hard to take advantage of undervalued stocks in the same way we can. Their margin of safety disappears pretty quickly because of this. Warren Buffett put it this way… “Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers.” He continues, “But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million—no, I know I could. I guarantee that.”
Now, we aren’t claiming to be Warren Buffett and we know you aren’t either…but we do know that the biggest players in the market (those that are probably controlling yours or your family’s retirement accounts) are investing with massive size, choice, and timing constraints which we simply don’t have. That’s where we gain our advantage—allowing us to consistently outperform the market with predictable, long-term results. You can do the same.
And how are we investing with predictable long-term results using the Margin of Safety Investing strategy? It begins with our number one focus—first—not losing money. That’s the world’s greatest investor Warren Buffett’s number one rule—don’t lose money. We aim to risk a little…and win a lot—on every single investment made.
This does not mean your investments won’t ever drop in value—in fact, it’s likely they could in the short-term. It means being certain that what you’re buying and investing in is a solid, profitable and wonderful company which will continue earning cash for you going forward, enabling you to sleep soundly at night. We do this with focused research, a long time horizon, and by using simple valuation methods which enable us to buy at attractive prices. We aren’t just value investors…we’re focused, margin of safety investors—investing with the safety of excellent businesses at attractive prices.
The alternative is by guessing what will happen in the stock market. Buying and selling with no understanding as to what the fair value of your stock is. It is wishing, hoping or praying that your mutual funds and retirement accounts will miraculously go up. That, somehow, they won’t suffer another massive market decline and all will continue to go well throughout our working and retirement lives. That’s no way to invest and secure your financial future. It doesn’t give you a margin of safety, at all. It does not give you the same degree of comfort and confidence that Margin of Safety Investing does.
Buy an Excellent Business at an Attractive Price
Warren Buffett and his business partner Charlie Munger have told us for years (and they’ve proven it with their results) that the way to invest with predictable outcomes, even certainty about your future, is to buy an excellent business at an attractive price. The process of doing that, over and over, throughout your investment lifetime, is investing with a margin of safety. You are making much safer investments with a lower degree of risk by, first, purchasing at an attractive price, and, second, only buying wonderful businesses which will continue to produce cash and make you money. Those two components create your margin of safety.
It's amazing when you realize that, along with the lower degree of risk, you also have enormous amounts of upside, or profit potential for your investment and retirement accounts. If my research tells me a stock is worth $30, and I buy at $20—then I have $10—or 50% upside potential. Which is pretty good. But if I buy that same stock at $10, then I have $20 of upside potential—or 200%. That makes a very significant difference in the amount of risk I’m taking on, the overall return that I earn, as well as my account balances down the road. By adopting this framework and consistently applying its principles, you are bound to improve on your existing results, and soundly beat the markets, the mutual fund managers, and most of the professional money managers over the long-term.
So how do we determine what a wonderful or excellent business is? Well it’s actually pretty simple and it boils down to four parts.
First, according to Buffett and Munger, you need to be capable of understanding the business. This means that we want a simple business with a fairly simple business model that we understand. If we know roughly how a company has made their money in the past, and roughly how they will continue to grow and produce cash going forward—then we have a simple and understandable business.
Second, the business should have a durable, competitive advantage. A competitive advantage is the quality that describes why they are a special, or wonderful company, and what makes them stand out above the rest to continue being profitable. A company with a strong competitive advantage can withstand competition, inflation, recessions, and industry downtrends—while still coming out stronger for its shareholders. They have a high likelihood of continuing to compound our wealth—no matter what plays out in the future. That’s the kind of company we want to be invested in.
Third, the business must have an excellent and honest management team. We only want to put our hard earned money with CEO’s who are motivated to go out each and every day to make the business better, and earn money for us as shareholders.
Then finally, no matter how wonderful the company is, we can’t pay an infinite price for it. Even the best, most well-managed company in the world is a bad investment at the wrong price. For that reason, we always demand a fair price that makes good sense, and a margin of safety which helps to protect us on the downside.
We look for these companies every day in our studies and research…and we’ll show you how to find them for yourself. Margin of Safety Investing is an extremely simple philosophy. It only requires patience, discipline, and a basic understanding of businesses.
Special Ops Investing
Although Margin of Safety Investing is at the core of our investment philosophy, we also want to stress the importance of the second component of our investing. This is what we call Special Ops. We try to allocate about 10 to 20% of our investment funds in order to take advantage of Special Opportunities that come up from time to time. These Special Ops are where we can realize some massive gains. Simply said--we go where the money is with this type of Special Op investing.
What this means is we might determine that certain sectors like precious metals have become extremely distressed, and we might believe this provides a very unique—perhaps a once-in-a lifetime opportunity—to take a very small risk with tremendous upside potential. It might be the oil industry, or bonds…it might be the real estate sector, or certain option trading positions.
When we see these opportunities, we’ll dig in with you and tell you why we are thinking the way we are, and we will help determine some of the best ways to invest in certain stocks, bonds, funds…or other investment vehicles that most help in capitalizing on specific Special Ops. Simply said, sometimes the market is providing such low risk opportunities, while at the same time providing unmatched growth opportunities which we just can’t ignore. We want to be in position to take advantage of these situations as they come along.
We want to alert you to these opportunities, and provide you with the proper tools, so that you can determine whether you are interested in being involved, and decide if it’s right for you and your financial scenario. We believe that our failure to make you aware of some of these opportunities when they present themselves would be doing a disservice to our students and clients.
So there you have it…our investment philosophy can be summed up with the two components of Margin of Safety Investing and Special Ops. This philosophy has served us very well over the years. We believe that applying it in the proper way will also serve you well for a long time to come. We invite you to give Investment Intel a try—you’ll get an automatic, free, 7-day trial—so that you can learn more and begin to immediately apply what fits for you.
We hope to connect soon.
Learn Effective Stock Option Techniques
In many webinars, we'll provide live demonstrations of ways we use options to decrease risk and generate additional income. This will include examples, illustrations, and the processes we use to determine the most optimal option strategies we're applying in the current market. We use options for various reasons in our accounts, including ways to:
Investment Intel Membership Is Unlike Any Other Investment Newsletter or Education
This membership is for investors who are seeking an edge in the financial markets. We aim to provide you with the economic and financial market education you need to succeed in the years ahead. We will not typically discuss mainstream advice that your broker, financial advisor, or CNBC is touting. Instead, we research unique opportunities which many others are not talking about or investing in—and clearly communicate our findings and strategy moving forward. This makes our upside potential for gains far greater than the average investor, and we continually look for ways to drive down our risk.
You can think of us as investment scouts, scanning the various global financial markets for unique opportunities—allowing you to decide what best fits your specific financial picture. With Investment Intel, you get to research and analyze alongside us—gaining access to Special Ops, Margin of Safety Investments, and various option strategies, which we and other students discover. It is not just a newsletter or live demonstration of investment moves to follow. It’s much more than that. We want to educate you, so that you will not be dependent on our research. Rather, we aim to teach you how to apply the best investment techniques and strategy going forward—so that you can take control of your financial future, and invest for the rest of your life with superior results—independently.
No worries. All new students automatically receive a FREE 7-day trial to try it out.