Introducing Charles Mizrahi and the Power of Value Investing
Publisher's Note: For years, my goal has been to bring new voices to the pages of Energy and Capital that could not only provide you with clear, concise market analysis, but also help ensure that even the most novice investor will be able to take complete control of their future investments.
And it's with that thought in mind that I'm pleased to introduce you to the newest member of the Energy and Capital team, Charles Mizrahi.
After honing his investment acumen over decades of ruling the trading floors on Wall Street, he's turned his eye toward loftier goals — helping everyday investors like us develop the skills and experience necessary to generate a lifetime of wealth.
Every Wednesday, Charles will offer his expert trading experience to you straight from Energy and Capital. And as an added bonus, you'll also be able to gain direct access to his expertise through two of his premium newsletters: Hidden Values Alert and Inevitable Wealth Portfolio.
Today, I've asked Charles to offer a little background into his distinguished career as a Wall Street investor, as well as lay the groundwork for you to understand the incredible potential to investing.
As you'll soon learn, finding and trading stocks that have been overlooked by the market is much, much easier than you might first think.
Managing Editor, Energy and Capital
It was about 33 years ago that I started making my first trades on the floor of the New York Futures Exchange. I was a far younger man back then, with a head full of steam, eager to make my mark in the world of investing.
After spending just one year in college, I had virtually nothing. I actually needed to borrow $12,500 just to rent a seat and open an account before I could even step foot on the floor.
Needless to say, I ended up scrounging up every last penny I could, even borrowing money from my grandmother, father, cousin, and brother... all just for the chance to become a floor trader.
The trading floor was the ultimate test, too. It was my first taste of the world of finance, and I saw right there the impact that emotion had on moving markets over the short term. Using a technical trading approach, I was able to turn a small amount of money into a sizeable account.
I even bumped into Wall Street legends such as Ace Greenberg and billionaire commodity trader Bruce Kovner. I also came across trading great Paul Tudor Jones long before anyone knew his name... before he famously shorted the crash of 1987, and well before he built his billion-dollar empire.
To this day, I still consider my first experiences there my real education. I learned a lot about temperament and how markets react on a short-term basis, and I learned from traders who were on the Forbes 400 list. Shortly after, I left the floor and started my own money manager, and later hedge fund.
Over the years, I continued to observe the super wealthy investors and, over time, saw that they didn’t use all the popular approaches that I was following.
The light bulb went off in my head after reading a small booklet, “What Has Worked In Investing.” The booklet went through over 50 studies of investment approaches over the past half century... and highlighted the approach that produced the most attractive long-term rates of return.
The approach that knocked the lights out time and again and was head and shoulders above the rest had to do with one thing: valuation.
Soon after, I went out and studied every book on value investing that I could get my hands on, along with anything to do with Warren Buffett and Berkshire Hathaway. I pored over value investing endlessly, and I'll be perfectly honest with you — it makes the best sense in the world.
I quickly made the jump from trading using charts and a technical approach to value investing. I even shunned all of my trading disciplines, focusing solely on valuation. I understand that abandoning some investment staples such as stop-losses, trends, etc. is anathema for most investors.
But let me divulge a little secret: many (if not all!) of those trading tools are useless after you understand how to figure out what a business is worth.
The stop-loss, for example, is nothing but an arbitrary number based on what number you bought in at; it has nothing to do with fundamental value at all. And besides, the stock market doesn’t care what price you bought the stock for.
I refused to implement any of my floor-trading strategies, despite the fact that floor trading did teach me volumes about behavioral finance, including how markets and investors react — and, if I might add, made me a lot of money over the years.
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So by now you might be scratching your head and asking yourself, “What exactly is value investing?”
Well, friends, that's the easy part.
To put it simply, value investors search for stocks that are mispriced in relation to the worth of the business. This approach was made famous about 82 years ago, after Ben Graham and David Dodd released their book, titled Security Analysis. (We'll explore more about Graham and Dodd's approach next week.)
In my newsletters, Hidden Values Alert and Inevitable Wealth Portfolio, you have a rare opportunity to join something that the other major financial publishers avoid like the plague: a real approach to trading stocks that actually makes money AND has the record to back that claim up.
And you'll soon come to find out that I won't hold anything back.
In fact, I plan on giving you the tools that will take your personal investments to the next level. In other words, I’m going to show you how the real money is made on Wall Street.
To be perfectly honest with you, that’s not something many others can say or do.
Think about this: how many other services that you use or professionals that advise you have cut their teeth on the trading floor? Or have even worked on Wall Street?
Heck, most of them couldn’t find Wall Street on a map.
It's precisely the same approach that Ben Graham taught Warren Buffett, which he has never strayed from for the past 50 years — and that turned Buffett into one of the richest people in the world.
My portfolios are based on the same methodology of buying financially sound companies when they are trading at attractive prices. In other words, I look to find dollar bills trading for 50 cents... that’s it.
I go about buying stocks the same way one would go about buying a coffee shop, hardware store, or car dealership: I look for companies that are financially sound and only buy them when they are trading at bargain prices. It doesn’t get more complicated than that.
Where to look and how to find them? That’s where my more than three decades of experience comes into play.
While it is a simple strategy, it’s not easy — not by a long shot.
It requires having the proper temperament to actually make the trade, but more importantly knowing how to sift through Wall Street’s pile of unloved and unwanted stocks. That’s where I spend my time and resources... looking for needles in the haystack.
In the coming weeks, months, and years, my goal is to open up this new approach toward investing to you. I’ll show you how to take advantage of a stock market that sometimes goes bonkers.
After I share this approach with you, you’ll scratch your head and wonder how you ever invested without. I promise you that.
I look forward to helping you secure your and your family's financial future and helping you grow your net worth.
Until next week,
Energy and Capital
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