Frank Curzio's WALL STREET UNPLUGGED Podcast

If You Want to Make Real Money in the Markets, Throw Out the Rule Book

What I’m about to tell you will blow your mind…

If you want to make serious money in the markets, you must throw out (almost) every investment book you’ve ever read.

These books might make you a better investor. But they won’t help you make life-changing gains.

Don’t get me wrong… I enjoy reading investment books.

From Peter Lynch’s One Up on Wall Street to The Intelligent Investor by Benjamin Graham, we all have our favorites.

I particularly like Roger Lowenstein’s Buffett: The Making of an American Capitalist and Burton Malkiel’s A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing.

I consider these books required reading for new and experienced investors alike.

But here’s the problem…

In One Up on Wall Street, Lynch wrote, “Earnings drive stock prices.”

But many companies—especially companies in their early stages of growth—don’t have earnings. Most of the money they generate goes right back into the business. This makes sense, since you need to spend money to grow your business. That’s how small-cap companies (companies with a market capitalization value generally between $300 million and $2 billion) become large-cap industry leaders (generally more than $10 billion).  

If you followed Lynch’s advice, you would have never bought companies like Amazon (AMZN) in 1997, Netflix (NFLX) in 2009, and Tesla (TSLA) in 2010. Back then, these industry leaders weren’t yet generating any profits.

Today, Tesla is up 1,600%, Netflix is up 8,200%… and Amazon is up 93,200%.

In The Intelligent Investor, Graham says to invest in companies with solid balance sheets that have paid uninterrupted dividends for at least 20 years.

But many companies don’t pay dividends. As I mentioned earlier, they may be reinvesting their cash (in technology, acquisitions, new talent) to grow their business.

Following Graham’s advice, you would have steered clear of just about every small-cap stock listed in the Russell 2000 index. You would have never invested in Microsoft (MSFT), Amgen (AMGN), or Apple (AAPL) when they were in their early-growth phases.   

And you would have steered clear of just about every small-cap stock during the credit crisis, since most balance sheets were shot to hell. But the Russell 2000 small-cap index is up over 300% from its March 2009 low.  

Warren Buffett says to buy companies with positive operating income for at least the past seven years.

But some small-cap stocks—including social media giant LinkedIn (LNKD) and customer relations management leader Workday (WDAY)—weren’t even publicly traded companies seven years ago.

LinkedIn, with a market cap of $400 billion at the time of its IPO, was purchased by Microsoft in 2016 for $26 billion… Workday, with a market cap of $600 million at the time of its IPO, has a market cap of more than $25 billion today.

You would have missed out on huge gains if you followed Buffett’s advice.

I could go on, but you get the point: If you followed the rules of investing from the pros mentioned above, you would have never bought any of these stocks. And if we followed these rules in Curzio Research Advisory, we’d be just another newsletter with a terrible track record.

Instead, I rely on boots-on-the-ground research… and my extensive Rolodex of billionaires and market experts… to find tomorrow’s big winners. In June 2016, I flew to Alaska to visit Northern Dynasty (NAK). The small mining company was sitting on one of the biggest undeveloped gold and copper projects in the world.

After talking to the management team and some of the greatest geologists in the industry, I recommended NAK at $0.35. Less than seven months later, the stock popped to $3.00—generating over 900% returns for us in less than seven months…

By attending the Consumer Electronic Show (CES) in Las Vegas in 2013, I found Skyworks Solutions (SWKS). Skyworks was about to become one of the biggest beneficiaries of the $13 trillion Internet of Things (IoT) megatrend. I recommended the stock at $22… and less than 24 months later, shares were trading at over $100. That’s a gain of 375% in less than two years…

If you throw out the traditional playbook, there are more big money-making opportunities in the market than you’ll ever have the time to invest in…

Good investing,

Frank Curzio