The Tycoon Report

Are you an investor-holic?

Tuesday, February 13, 2007 | Dylan Jovine


DYLAN: Hi, my name is Dylan, and I'm an individual investor.

ALL OF YOU TOGETHER: Hi, Dylan!

DYLAN: Thanks for inviting me to share my story.  I know how limited email boxes can be, so I appreciate the time.

ONE OF YOU: Thanks for sharing.

DYLAN: Uh, yeah...thanks again for having me.  Anyway, this is a little odd for me.  I've never shared my story at a support group before... But Marc invited me to speak to y'all today... I guess he thought by telling you my story, I may be able to help you see past the blind bullishness in the marketplace today.

ONE OF YOU: Keep coming back!

DYLAN: Uh, well, thanks... Let's see, where do I start?

For those of you who don't know, I'm the Chief Investment Officer of Fallen Angel Stocks.

ALL OF YOU: (Applause)

DYLAN: Please, please...you're gonna make me blush...

ALL OF YOU: (Laughter)

DYLAN: OK, OK, enough, already!

ALL OF YOU: (Uncomfortable silence.)

DYLAN: I'm sorry...um, where was I?  Oh Yes!  Fallen Angel Stocks... Well, Fallen Angel Stocks is a monthly investment newsletter that gives members objective advice on where they should invest their money.

ONE OF YOU: What's the website?

DYLAN: Oh, Yes...It's..um...www.fallenangelstocks.com

But I know we're all limited on time, so let me get on with it...

I started my investing career at a very early age.  I don't know...I was probably running away from something or whatever, but for some reason I just took to it.

At first it wasn't too bad.

Sure, I read the Wall Street Journal and watched CNBC, but I was in control.  I only traded when I thought I could make money.

But, as I'm sure many of you could relate to, my addiction progressed...

Before I knew it I was using Bloomberg and pulling all-nighters watching market news...

I couldn't have been more than 19 at the time....(PAUSE)

(DYLAN CHOKES BACK SOME TEARS)

ONE OF YOU: It's OK...take your time...we're here for you.

DYLAN: Thanks...thanks very much... But then it got worse.  Much worse. Pretty soon I actually became part of the herd. Whenever Wall Street became bullish, I became bullish.

Whenever Wall Street turned bearish, I automatically turned bearish. Right before I hit Rock Bottom, I even found myself repeating what the television pundits were saying any time I went to a party.

ALL OF YOU: (GASP!)

DYLAN: Yeah, it was bad.  I almost lost everything.  My ability to think for myself, my identity....everything...

So, I guess that's why I'm really here today. You've all been watching the news recently, right?

ALL OF YOU: YEAH!

DYLAN: Then you know what I mean when I say the last few months have seen a big disconnect between the performance of the stock market and underlying fundamentals.  In other words, it just seems that most investors aren't pricing enough rick into their expectations.

ALL OF YOU: HERE, HERE.

DYLAN:  It seems that everywhere I look, folks are ignoring some pretty dismal fundamentals.

Gosh, one report I read even predicted a 20 percent rise in the S & P this year!  And that was from a "reputable" brokerage firm!

ALL OF YOU: (GASP!)

DYLAN: So, I guess I'm here today to remind you that sometimes the hardest thing to do is ignore the headlines and remain faithful to your own investment philosophy.

It's a funny thing, but sometimes we, as investors, toss aside our own hard-earned experience just because the headlines in the papers or the pundits on television sound like they know what they're talking about.

But most of them don't know squat, really.  In fact, the single most surprising thing I learned during my time on the Street was how little most people working there knew. 

(It's kind of like Hollywood that way: 99% of the people spend their time dropping the names and chasing the deals and copying ideas created by the 1% running things.)

So, as we continue our march through 2007, let me share with you what I'm sharing with members of Fallen Angel Stocks:

As I wrote about last week, don't forget that regardless of what you hear, 2007 is at an economic tipping point.

And while it's not a foregone conclusion that the stock market is headed down, it is a foregone conclusion that the risks of that happening are higher now than at any time in recent years.

Indeed, "CAREFUL" is the watchword as we move through the first quarter.

Since our investment philosophy here at Fallen Angel Stocks is completely independent of the direction of the stock market, nothing much around here is going to change: We're still going to make the bulk of our money buying great companies at cheap prices.

Whatever your own investment philosophy, I have one big nugget of advice to share with all of you today:

Don't get caught up believing the hype of the headlines.  Making investment decisions based on what you read as opposed to what you know is a very fast way to the Poor House. 

AUDIENCE MEMBER: What do you mean by "hype of the headlines"?

ANOTHER AUDIENCE MEMBER: Yeah, what do you mean when you say to make investment decisions based on what you know, not based on the headlines you read?

DYLAN: A real quick example of that is what's been going on in the housing market:

From mid-December to February 1st, the "experts" began to suggest that the housing market had hit bottom.  These experts included government officials and other groups such as national real estate associations.

But any listener to an earnings call of any major home builder would have heard CEOs who sounded far less certain of that than many of the "experts" themselves sounded.

Now, I don't know about you, but I'd take the opinion of a CEO who is in the actual battlefield over an academic who spends his day reading data.

AUDIENCE MEMBER: Are you saying we can't trust government experts?

DYLAN: No.  What I am saying is simply to consider the source of the information you're reading.

Many of these groups know that investing is all about mass psychology, and their main goal is to avoid a financial panic which would make things worse for everybody.

But taking them seriously would be like taking a cancer study conducted by Phillip Morris in the 1970's seriously: not a great idea!

ALL OF YOU: (Applause)

DYLAN: Thank you, thank you.  Yeah, you in the back.  Do you have a question, sir?

DUDE IN THE BACK:  Where can we find out what stocks you're buying?

DYLAN: That's easy.  Go to www.fallenangelstocks.com.

Feel free to sign up for a free 30-day trial....it's on me.

ALL OF YOU:  (RESOUNDING APPLAUSE)

DYLAN: Thanks for letting me share.


Dylan Jovine
Chief Investment Officer
Fallen Angel Stocks




Dylan Jovine
Contributing Editor
The Tycoon Report