Friday Edition-Rational Liquidation Value

Today I am going to share a method that one of the two best ways for individual investors to make money in stocks. I am talking big money, money that causes George Soros to blush with envy. If you put half your money into this strategy and half into small banks below book value, you would outperform pretty much every mutual fund and hedge fund that ever existed.

It is not easy to execute this strategy. You will own stocks no one has ever heard of before. You will own tiny companies in both parts of your portfolio. There will be many times you ask yourself, "WTF am I doing?" when you click the buy button in your brokerage account.

This is a variation of the technique that Ben Graham developed decades ago and his student Warren Buffett used to get rich. Buffett got so rich he could not use this strategy anymore.

Walter Schloss used a variation of it to compound his clients' money at more than 20% annually for almost 50 years.

The beauty of this strategy is that institutions cannot play the game. Most of the stocks are too small to move the needle for their portfolio.

This strategy and small banks stocks are why I laugh when people tell me value investing doesn't work.

It works.

It works as well as id did when Buffett used it to make millions in the 1950s and 60s.

It just doesn't scale.

You cannot use this strategy to run hundreds of millions or billions of dollars. It really cannot be used to run any outside money as subjecting these small companies to buying and selling based on the whims of passive outside investors would often be disastrous.

It can be used to manage your money. It is a hands-on ...

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Friday Addition Edition-Rational Liquidation Value

Today I am going to share a method that one of the two best ways for individual investors to make money in stocks. I am talking big money, money that causes George Soros to blush with envy. If you put ...

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Comments

Friday Edition looks at 2021 bank M&A

For today's Friday Addition Edition, I am going to stay with the banks. I got a copy of the full KBW Bank M&A report, and I want to share the information and ideas with you. KBW is one of the ...

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Friday Addition M&A Edition

For today's Friday Addition Edition, I am going to stay with the banks. I got a copy of the full KBW Bank M&A report, and I want to share the information and ideas with you. KBW is one of the ...

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Friday Edition

We skipped the Friday addition for the Christmas and New Years Holiday, but we are back with some ideas for you to consider outside just your bank stock portfolio.

I have been focusing a lot on income-generating investments in these ...

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Friday Addition Edition

We skipped the Friday addition for the Christmas and New Years Holiday, but we are back with some ideas for you to consider outside just your bank stock portfolio.

I have been focusing a lot on income-generating investments in these ...

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Comments

Friday Addition Edition

If you have been following me for any length of time, you know I spend a lot of time researching and modeling various investment ideas and strategies. It interesting, often entertaining, and it keeps me off the streets.

I probably ...

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Friday Addition Edition

It has been a hell of a week for IPO's. We saw Door Dash (DASH) flu and Airbnb followed the next day with its own very impressive first-day move.

If you got IPO shares, count your blessings, and take your ...

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Friday Edition Addition

Is it just me, or is it really difficult to get into the spirit of a COVID Christmas?

The tree is up, the outside decorations are out, and the calendar says December. Still, with all the boat parades, tree lighting, ...

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Friday Addition Edition-SPACs, Rates and Day Traders

Sorry for the delay with this today. I had most of it written before lunch, but the power went out, leaving me with no internet and the original document perched on a powerless desktop.

Now the dedicated folks at Florida ...

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Friday Addition Edition #4, Vaccines, REITs, Books and Banks

Speaking at an event in the European Union yesterday, Fed Chair Jerome Powell once again took Congress to task for not providing a fiscal stimulus package. Speaking at a virtual panel at the European Central Bank's Forum on Central Banking, ...

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Friday Additions: Private Equity, Real Estate and High Yields

I kind of suspected yesterday's rally would have a hard time gaining traction. Many of the headlines surrounding the coronavirus look good, and we are edging closer to election day, which I think has the potential to go horribly wrong. ...

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