Wall Street Daily: What’s the Big Idea?!
Here at Wall Street Daily, we’re on a long-term mission to identify innovators that will lead the way to a better tomorrow.
How close are we to curing cancer?
When will we colonize the cosmos?
Is the Internet of Things going to kill us before we conquer disease and move to Mars?
These are just a few of the questions we’re trying to answer here at Wall Street Daily.
And in the process, we’re identifying the game-changers who can turn big ideas into marketable products and services.
As we wrote on July 25, 2016, when describing our new mandate as the small-cap division of Agora Financial:
We’re about ideas — good, bad, ridiculous… those that will support a market and generate consistent earnings growth… those that are mere means for promoters to cash out at the expense of the underinformed… those that emanate from the Wall Street-Washington, D.C.-Mainstream Media Empire Nexus.
The Russell 2000 index — the primary benchmark for small-cap stocks — posted an incredible rally during the last two months of 2016, to close the year with a gain of 17.5%.
From July 28 — when we identified three reasons to buy small caps “right now” — through December 30, 2015, small caps gained 11.3%, dwarfing the S&P 500 index’s 3.3% as well as the Nasdaq Composite’s 4.8%.
We’ve clearly benefitted from good timing.
You never know what’s going to happen, or when. You can only prepare.
Ultimately, we’re the entry point for premium services such as True Alpha, Extreme Alpha, and VentureCap Strategist, where our Chief Investment Strategist Louis Basenese, and his team of experts make specific recommendations based on thoroughgoing research into the types of technologies we explore in this space.
Our approach is rooted in what Lou calls “primary due diligence.” That’s how we create the information advantage that leads to higher returns over the long term.
I last sang Lou’s praises on August 12, recounting how, back in February 2016, he countered some “wisdom” dispensed on CNBC about “the death of small caps” with advice that this particular asset class was, indeed, poised for resurgence.
And so it goes…
This is no time to rest on our laurels, however, and we don’t intend to engage in any such foolishness.
Rather, we’ll set ourselves once again the foundation we described in that August 12 issue:
The approach we take is based on a set of principles that we think make for a good plan to build, preserve, and grow wealth over the long term.
It starts with being numerate. Our research analysts are good with numbers. They understand how to read financial statements and balance sheets.
From there, we place a premium on understanding value, or the present value of free cash flow.
Another major element in our success is to understand the industries we follow and to know how a particular company fits into that industry’s cycle — including barriers to entry, the economics of the business, and management’s skill at allocating capital.
At the same time, valuation metrics have limitations. They provide a snapshot, but understanding value is a truly multifaceted process.
A critical factor for evaluating small-cap stocks, particularly those that operate in high-tech businesses, is to properly assess management’s approach to making money. Strategy is key.
When it comes to taking apart quarterly and annual reports, it helps to be able to make effective comparisons between expectations and fundamentals.
Our mindset — based on the fact that there are few sure things in this game — is oriented around probabilities.
And when the facts change, we’re not afraid to change our minds. We think constant education is a good thing. We choose to update your views. Beliefs are hypotheses to be tested, not treasures to be protected.
That means being aware of our behavioral biases, such as the negativity bias we discussed in the August 11 Wall Street Daily. Being aware of our biases helps minimize constraints on clear thinking.
Finally, reading is a big part of what we do. Constantly refreshing the brain is the best way to keep an open mind. We’re also careful to avoid confirmation bias: We seek out viewpoints contrary to our own.
Here we are, three days into a new year, and only a week since we lost Princess Leia.
Over the course of 2017, we’ll continue to do what we’ve done since July 25, 2016: Chart the universe of small-cap stocks — to understand the origin, evolution, and ultimate fate of the tiny innovators that will lead the way to a better tomorrow.
And we’ll help you identify, invest in, and profit from the next Apple Computer…the next Gilead Sciences…the next Costco Wholesale…
This Week In…
Gluttony, courtesy of The Outline’s Laura June: “Scientists Finally Know Why Champagne Is Delicious.”
“Scientists,” June writes, “have long studied the chemical processes responsible for the distinct tastes and smells of liquors and wines. A recent discovery — one which any accomplished seltzer drinker could understand without science — confirms an idea long held to be true: A lot of the magic in champagne is actually magic in the bubbles.”
Not all bubbles are bad.
Editorial Director, Wall Street Daily