by Gary Alexander

July 27, 2021

While I was at the Freedom Fest in South Dakota, I delivered a talk with this title. (This is a longer version for Growth Mail.) The first installment covered my experiences up to 1990, when I was primarily bearish.

Here are the key points from Part 1 (from Growth Mail, July 20, 2021)

Lesson #1 (from the 1960s) Seek Lifelong Education (from Wise Mavericks)
Lesson #2 (the 1970s): Be a Contrarian Investor: Flip the Old Script
Lesson #3 (the 1980s): Invest in Yourself: Build Your Own Business
Lesson #4 (the 1990s): Learn from History to Be an Optimist

Now, on to the conclusion:

Lesson #5 (the late 1990s): Build Winning Partnerships with (or at least, learn from) Great Advisors. In the 1980s and 1990s, I met a series of investment advisors that turned my thinking around, and, in some cases, we began working together in the 1990s. They helped me think more clearly, and I helped them reach larger audiences, mostly through a major newsletter publishing firm operating out of Maryland.

First, I helped launch a letter by a leading contrarian, who authored a book on that subject. Then I sought out the man who turned my thinking around more than any other. He ran a major U.S. bank’s operation out of Zurich in the 1970s and then launched the first major investment letter on foreign stocks for U.S. investors in 1980. I followed his letter from the launch, since, by late 1980, I was co-writing a book on foreign investing for Americans. When I moved to New Orleans in 1983, he was a regular exhibitor at the big conference there, where I worked as moderator and managing editor of Gold Newsletter and Wealth Magazine. More than any other mentor, he gradually convinced me that I was wrong about my perma-bearish view on stocks, so in the early 1990s, I negotiated between my publishing firm and him to create a larger audience for his global value investing idea, and it took off in the 1990s.

This advisor was primarily a value stock investor, so my second great partnership began in 1997 with Louis Navellier, who is primarily a growth investor. I thought the world needed both. I certainly did, so I helped launch two of Louie’s newsletters with my publisher’s firm. At the same time, I was constantly looking for other leaders in the investment arena, as I often worked with three or four advisors at once, while also researching and writing the history of “Financial Gurus” for Knowledge Products, with my script narrated by the late Louis Rukeyser. Later on, I edited Smart Money Investor Insights, “a review of top stocks from America’s Top Investment Advisors,” a compendium of what the best minds were saying.

Lesson #6 (the 2000s): Don’t Try to Time the Market (Even if You’re Temporarily Burned).  Y2K launched the worst decade since the 1930s. By some measures, it was even worse. Like the 1930s, there was an initial crash in 2000-02 (like 1930-32), then came a second crash in 2007-09 (like 1937-39), but at least the 1930s were a time of deflation, when prices trended lower, so “real” stock losses were worse in 2000-09 than in the 1930s. But did I sell stocks in 2000 and 2007? Not on your life. I’m not that smart!

Market timing is perhaps the toughest skill in the investment tool kit. You have to get the timing right on both ends, and experience shows that not one in 100 (maybe 1,000) investors gets it right. Our emotions are our worst enemies. We tend to sell at bottoms and buy at tops, but even if we are iron-willed robotic nerds with perfect computer models, we must get out at the top (and maybe pay high capital gains taxes) and then buy back near the bottom. Two things are more likely to happen. First, the market will likely keep rising after we sell, since market momentum is usually stronger than we thought – and the market seldom follows historical patterns to the letter. (It does whatever is necessary to fool most investors.)

Second, the market will not telegraph the bottom. Most bottoms happen so fast you will miss the signal and then NEVER get back in. Last March 23 is a case in point. Nearly everyone was predicting a deep Depression, on the order of 30% unemployment, a year-long contraction, a stock market mired at a 50% discount for 12 to 18 months, but what happened? After just a month of panic selling, the market did a sudden U-turn and the S&P 500 gained 20% in three trading days. Can you honestly say you would buy the recovery after it was already up 20%? Most investors would “wait for a dip” (which never came).

Market Crash Timeline Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

I just rode it all out, since I knew the market would come back. It always has, and it probably always will.

Lesson #7 (the 2010s): Let Your Winners Run (only sell when you need the funds). Buy good stocks and hold them “forever.” Only sell when their fundamentals change or you need the funds, perhaps in retirement or to fund a major purchase. This is one reason I normally kept all my money with a self-directed discount broker. I don’t want a broker sharing ideas with me, often based on a not-so-hidden agenda of generating commissions. I get my stock ideas from my partners (like Louis), described above.

A few years ago, I transferred most of our wealth to a local brokerage so that my wife could share in our financial planning should something happen to me. Part of that deal was inheriting a “full service” financial planner who is usually helpful but wants me to trade more often than I wish. Last April, my broker advised me to invest in the new realities of remote work and recommended I sell Disney, which I had held “forever.” He made good arguments about the closure of their theme parks being bad for Disney, and I liked some of the new ideas he offered – and I wanted to be a team player – so I approved the sale of Disney at $100 a share. I should have consulted my partners, who told me last April that Disney had a good business plan for the lockdown. Disney doubled to $200 this year, though it recently dipped to $172.

Disney's Ten-Year Performance Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Selling a big winner “too soon” often hurts more than holding on to a loser “too long,” so I tend to let the winners run, only selling when I need the money in retirement or for required minimum distributions.

There will be more lessons to learn in the future as long as I continue to (1) learn, (2) be a contrarian, (3) work for myself, (4) keep positive, (5) build partnerships, (6) stay invested, and (7) let my winners run.

Navellier & Associates does not own Walt Disney Co (DIS) in managed accounts. Gary Alexander does not own Walt Disney Co (DIS) personally.

All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

A Look Ahead by Louis Navellier
Freedom Day?

Income Mail by Bryan Perry
Top-Down Convertible Funds Are Timely

Growth Mail by Gary Alexander
Seven Life Lessons for Building Wealth (Part 2 of 2)

Global Mail by Ivan Martchev
When Stocks Follow Bonds

Sector Spotlight by Jason Bodner
Navigating Risk and Fear

View Full Archive
Read Past Issues Here

About The Author

Gary Alexander
SENIOR EDITOR

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander

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