Editor’s Note: We’ve got some exciting news to share with you. Starting next week, the best of Banyan Hill are coming together under one masthead.
We’re launching a new super e-letter featuring the other experts at Banyan Hill — Ian King, Amber Lancaster, Mike Carr and Adam O’Dell led by Charles Sizemore.
These are Banyan Hill rock stars. And they are coming to the table with their best ideas every single week — for YOU!
So in place of Real Talk Daily, you’ll be getting our new e-letter starting Monday.
And every Wednesday, you’ll hear from Charles. He’ll even be featured on a new podcast with the Banyan Hill team!
So, now, we want your input! What do you think we should call this brand-new e-letter? Let us know here.
People are sometimes shocked when I tell them…
But my thinking isn’t that much different from Cathie Wood’s.
She founded Ark Invest in 2014 to focus on disruptive technologies like artificial intelligence, robotics and 3D printing.
It was exciting stuff, and her early investors doubled their money over the first four years.
Investors were captivated by her conviction.
She simply never worried about going against the crowd.
In 2018, she told the media that Tesla shares were going to $4,000 in five years.
She was laughed at by Wall Street for that one — but she turned out to be right.
Tesla’s shares hit her price target (adjusted for splits) in 2021. Two years ahead of schedule.
In short, she was not afraid to go against the crowd, and she held steadfast to her convictions.
And right here is where we part ways…
Standing by Your Convictions
I too am not concerned about going against the crowd.
During the COVID bear market of 2020, I recommended Arista Networks and HCA Healthcare.
Some readers thought I lost my marbles.
It seemed obvious to almost everyone on Wall Street that both companies were going to be in for a tough time.
Companies that operated in the cloud were cutting back on ordering hardware from Arista…
And hospitals stopped performing elective surgeries during the pandemic … which was hurting HCA’s bottom line.
But I was steadfast in my convictions that these companies were being underpriced by Mr. Market.
And I wasn’t concerned about looking silly buying when the market was falling.
In both cases, we were rewarded: Arista is higher by more than 230%, and HCA by more than 140% since we added them.
But here’s another way Cathie Wood and I are very different.
While I stand by my convictions, I also admit when I am wrong.
Like back in February 2020, when I added Delta Air Lines. My thinking was that COVID was an Asian problem and the impact on the U.S. would be minimal.
A few weeks later, travel of all kinds ground to a halt. Delta plunged more than 50%.
Boy, was I wrong.
I had no idea what the airline industry would look like in a post-COVID world.
And once the facts change, I change my mind. So I recommended selling Delta at a loss.
I want every trade to make you money, but the Real Talk is … that’s never going to be the case.
So it’s important to realize when you get it wrong, get out of your position and learn from your mistakes.
But Cathie?
Doubling Down
At the end of last year, the tailwinds of low interest rates and nonexistent inflation that drove speculation were no more.
This year, interest rates are rising, and that acts like kryptonite to companies that have great stories but no profits.
Capital becomes more costly and scarce, and those companies can’t get it.
With capital, they can’t keep their business going, and plunge in value.
And that’s what happened to many of the holdings in Wood’s ARK Innovation Fund.
Her largest holdings, Tesla, Zoom and Roku plunged, and the fund was off more than 75% from its peak.
And once the facts changed, what did Wood do?
She doubled down!
She continued to make outrageous forecasts like $1 million bitcoin, or comparing telemedicine company Teladoc to Amazon.
The economic environment shifted, but her thinking did not.
That’s the difference between Cathie Wood and me.
You can’t control everything in investing. But you can control yourself.
The key is to stay balanced in your approach … be ready to change course when the facts change … and you’ll be setting yourself up for success.
That’s how you invest like an Alpha Investor.
We too look for companies that are innovating and capturing market share in their industry.
And that’s more than a great story of what our future is going to look like.
We have many market leaders in our portfolio that are quality businesses, run by rock stars, that we bought at attractive prices.
That’s what we’ve had in our Alpha Investor portfolio since starting it in 2019.
Right now, we’ve got 14 open positions showing double-digit gains … and four positions with triple-digit gains.
Our latest recommendation is a financial powerhouse that is about to create huge shareholder value…
If you want to see how you can get it and more, click here for the details.
Regards,
Charles Mizrahi
Founder, Real Talk