Saturday, May 30, 2009

How Susan Boyle Provides a Lesson for Stock Investing

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

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Tonight is the final show in this season's 'Britain's Got Talent', the rough equivalent of 'American Idol'. The odds on favorite to win is Susan Boyle. Ms. Boyle is one of the most unlikely of superstars. She doesn't look the part. Instead of being young, glamorous, and sophisticated, she is middle aged, frumpy, and quirky. When she appeared for the audition, the public jeered and the 'expert' judges rolled their eyes. But when she opened her mouth to sing, it became immediately evident that Susan Boyle was one of the biggest talents of our era. Her audition performance so far has 220,000,000 online views on You Tube and elsewhere - the most ever, beating out second place by 100,000,000.

If Susan Boyle had been a stock trading on the market, she would have been valued in the low single digits barely hoovering above a bankruptcy price. She would have been generally ignored by the public. Any stock advice service would have rated her at their lowest level, pointing out all the superficial flaws and ignoring the rich value underneath. She would get no media coverage, most of which is reserved for the exciting glam stocks of the moment and the slow moving big caps. While the glam stocks can burn your portfolio badly, it's the Susan Boyle stocks that make you the big money.

The thing I find most amazing about Susan Boyle, is that there were a number of points throughout her life when should could have been discovered, but wasn't. People saw her, but they didn't look; they heard her, but they didn't listen. They simply ignored a major talent staring them right in the face. The analogy for the stock market is apt. The real money making stocks are ignored over and over again. They are staring you and the 'experts' in the face the entire time though. If you can train yourself to look at the data points that everyone else ignores, you can become quite rich. If you have any doubts, just look at Warren Buffett. He basically pays attention to aspects of a company that Wall Street ignores.

The most obvious example of the Susan Boyle phenomenon currently is what has happened to natural resource stocks in the last year. Some of the smaller caps lost 90% of their value or more. Did their value really change though? All the gold, silver, oil, diamonds, etc were still under the surface available for use in the future. The price of these are likely to go up substantially as time goes on as well. Yet traders and investors got caught up in the events of the moment. The real worth of these stocks were ignored (except by the New York Investing meetup and other non-mainstream sources) and that is one reason they have started roaring back.

Investing would be so much easier if stocks could just sing for you.

NEXT: GM Bankruptcy End of Era; Oil Rally Continues

Daryl Montgomery
Organizer,New York Investing meetup

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

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