Page 551 - How to Make Money in Stocks Trilogy

418 INVESTING LIKE A PROFESSIONAL

The 1982 and 1978 Full-Page Bullish Ads

We don’t try to call every short-term or intermediate correction. Our pri-
mary focus is on recognizing and acting upon the early stages of each new
bull or bear market. This includes searching for market sectors and groups
that should be bought and those that should be avoided.
In early 1982, we placed a full-page ad in the Wall Street Journal stating
the back of inflation had been broken and the important stocks had already
made their lows. That May, we mailed out two wall charts to our institu-
tional clients: one of defense electronics stocks, and the other of 20 con-
sumer growth stocks we thought might be attractive for the bull market
ahead. We also made a point of going to New York and Chicago to meet with
several large institutions. In these meetings, we stated our bullish posture
and provided a list of names that could be purchased after these organiza-
tions did their due diligence.
The stance we took was counter to the position of most institutional
research firms at that time, as well as to the negative news flooding out of
the national media each day. Most investment firms were downright bear-
ish. They anticipated another big down leg in the market. They also pro-
jected interest rates and inflation would soar back to new highs as a result
of government borrowing that would crowd the private sector out of the
marketplace.
The fear and confusion created by these judgments frightened many
large investors. As a result, they did not fully capitalize on the fact that we
had identified two leading groups for the coming bull market. It appeared
professional managers had been bombarded with so much negative “expert”
Wall Street input that they found positive findings hard to believe. As for us,
we invested fully in the summer of 1982 and enjoyed our best performance
up to that time. From 1978 to 1991, our account increased 20-fold. From
the beginning of 1998 through 2000, our firm’s account, run out of our sep-
arate holding company, increased 1,500%. Results such as this remind us it
may be an advantage not to be headquartered in rumor-filled and emotion-
packed Wall Street. I have never worked one day on Wall Street in my entire
time in the investment field.
As a savvy individual investor, you have a gigantic advantage in not having
to listen to different, strongly held opinions. You can see from this example
that majority opinions seldom work in the market and that stocks seem to
require doubt and disbelief—the proverbial “wall of worry”—to make mean-
ingful progress. The market contrarily moves to disappoint the majority.
Our first full-page Wall Street Journal ad was in March 1978. It predicted
a new bull market in small- to mid-sized growth stocks. We had written the
“Grab The Bull By The Horns” ad weeks ahead of time and waited to run it