If You're Not Getting the Results You Want, Ask Yourself These Two Questions

The lessons we can learn from Golden State's meteoric turnaround... If you're not getting the results you want, ask yourself these two questions... No single investment strategy works for everyone... What are your investment goals?... A feature you may not have noticed on our website... Why value is about to outperform growth...

For almost 40 years, the Golden State Warriors were one of the NBA's perennial laughingstocks...

From 1976 to 2010, everything that could go wrong pretty much did.

The Warriors let future Hall of Fame coaches slip through their fingers, like former assistant Gregg Popovich, who has since built a dynasty in San Antonio... They traded away future All-Stars like Chris Webber for players who went bust... And they squandered numerous draft picks, selecting guys like Purvis Short over eventual Hall of Famer Larry Bird.

It's not hard to see why owner Joe Lacob was ridiculed when, after purchasing the team in 2010, he said the goal was to win a championship within five years.

But it turns out, Lacob got the last laugh... Golden State won the title in 2015, 2017, and 2018, and it's the odds-on favorite to win it all again this season.

In a few short years, the Warriors have become one of the most dominant forces in all of professional sports... Which begs the question, how did they do it?

Two moves explain much of the Warriors' incredible turnaround...

First, Lacob hired executives with championship pedigrees.

In 2011, shortly after buying the team, Lacob successfully recruited three new key executives: Jerry West, Bob Myers, and Rick Welts. West and Myers played on championship teams. Welts was the director of public relations when Seattle won its only NBA title in 1979.

These three knew what it would take to bring a championship to Golden State. So it was no fluke when the Warriors wisely used their high draft picks in 2011 and 2012 to add three players who would later become key members of the 2015 title team.

The three executives were also instrumental in hiring head coach Steve Kerr in 2014. Kerr had won five NBA titles as a player. During his first season as coach, Kerr brought Golden State its first championship in four decades.

That brings me to the second move that was instrumental to the Warriors' success...

Kerr didn't come in with some preconceived, utopian notion of what would work best for any team. Instead, he crafted a game plan that was an ideal fit for this team.

Coaches in sports at every level come and go all of the time. Much of this failure can be traced to a single root cause: The system that worked well for them in the past simply didn't translate into success for their latest team.

Kerr turned this approach on its head... After extensively studying the strengths of every player on the team, he built an offensive scheme that was a great fit for their top attributes.

Golden State superstar and former league MVP Steph Curry said he appreciated that Kerr didn't "try to come in and be the hero and reinvent the wheel when it came to what we were good at."

There's an important lesson for investors in Golden State's rise from mediocrity to greatness...

If you're not getting the investment results you want, you need to ask yourself the following two questions...

1. Am I really using the right investment strategies for me?
2. Am I relying on the right investment research for those strategies?

Let's start with the first question.

Aswath Damodaran is a finance professor at New York University's Stern School of Business. He's one of the brightest investing minds you've likely never heard of. Damodaran doesn't have a financial interest in selling you anything, so he's a true advocate for the individual investor. He maintains a comprehensive website that every serious investor should check out. You can also sign up to receive his latest blog posts for free.

Like Kerr, Damodaran knows how important it is to develop a strategy that makes the most sense for you. Here are some words of wisdom from a recent interview with Forbes...

I'm going to say something that is going to sound strange. I think we spend too much time reading what other people think and do in investing. I think we spend too little time on introspection.

I tell people that the person you have to understand best to be a good investor is yourself. It's not enough to understand what Warren Buffett does and [what] Peter Lynch does. It might surprise people, I spend very little time reading investment books...

We live in a Google Search world. People think that if they search long enough, they can [find] answers to their questions, when in fact what they need to do is to stop and think about the questions and think through their answers.

We need to own our own investment philosophies. We need to think through what we think about markets. Which means I spend a lot more time with the Wall Street Journal and reading the news of today and trying to figure out why companies are doing what they're doing rather than focusing on what other people think about companies. Or what other people think about investing.

In short, no single investment philosophy is the best fit for all investors...

What works for Warren Buffett won't necessarily work for you or me.

In the November 2 Digest, for instance, I detailed a lucrative strategy for long-term investors. As I mentioned in that essay, my friend Neil is retiring a wealthy man because he had the right temperament to be a long-term, "buy and hold" investor.

This approach requires extraordinary patience and discipline. You need the stomach to buy when everyone else is selling. If you're impatient or inclined to worry about taking losses, this approach is unlikely to work for you. A trend-following strategy that relies on stop losses is probably a better bet for you.

Now, ask yourself if you're relying on the right research for your investment strategies...

Sports team owners usually make their fortunes doing other things. Lacob is a partner with venture capital firm Kleiner Perkins, and Los Angeles Clippers owner Steve Ballmer is the former CEO of Microsoft.

They can't possibly know everything they need to in order to make crucial (and often highly complex) personnel decisions at this level... so they hire others who possess the requisite knowledge and experience to advise them.

Individual investors often find themselves in the same situation. They're busy with running a business or raising a family. They don't have the time (or the desire) to do in-depth investment research, so they hire others – like Stansberry Research – to do it for them.

Once you've decided what strategies are best suited for you, the next step is to identify which research services best fit those strategies.

Lucky for you, we have a resource on our website to help you do just that...

On our Products and Services page, scroll down and click on "What's your investing style?"

Doing so gives you a list of investment strategies (i.e. Dividend Investing or Options Trading), themes (i.e. Low Risk or High-Return Potential), and market sectors (i.e. Consumer Staples, Industrials, or Utilities).

Check the boxes that meet your preferred strategies, click "Apply," and it generates a list of Stansberry Research publications that meet those criteria.

Alternatively, you might prefer one of our three comprehensive Stansberry Portfolio Solutions products (Total, Income, or Capital). Each one includes a model portfolio designed to meet specific objectives. The Investment Committee tells you exactly what to buy, how much to allocate to each position, when to buy and sell, and what stop loss to use to limit potential losses.

Extreme Value is a source of ideas for all three portfolios...

My colleague Dan Ferris and I expect a lot more of our ideas to be showing up in these portfolios over the next few years.

You see, value stocks like health care and consumer brands have been underperforming growth stocks – like market darlings Amazon (AMZN) and Facebook (FB) – for years.

Take a look at the following table, which shows how dramatically the iShares Russell 1000 Growth Fund (IWF) has outperformed the iShares Russell 1000 Value Fund (IWD) over three different recent time frames...

Eventually, the pendulum will swing back in favor of value stocks.

As my colleague Dan Ferris noted in the November 9 Digest, two decades ago, when the dot-com mania gave way to the eventual meltdown, value beat growth by an incredible 32% annualized.

We're seeing early signs this setup might be happening again...

Last quarter, tech darlings Apple (AAPL), Amazon, Facebook, and Google's parent company Alphabet (GOOGL) all reported actual revenue and/or guidance below Wall Street expectations. Together, these four stocks comprise about 36% of the Nasdaq 100 and 12% of the S&P 500.

When the market's leading stocks begin to falter at the same time, investors take notice and quickly reassess their forward growth expectations.

Take Amazon, for example. Shares are down more than 15% since early September, largely on reduced growth expectations. A decline from implied growth of 25% to 19.5% might not sound like much. But compounded over a decade, it makes a huge difference in the present value of those distant future cash flows...

The main point I want to leave you with is this...

For a high-growth business like Amazon, forward expectations don't have to fall much for the stock to get crushed. A further reduction in growth expectations to 15% per year would likely take shares down to approximately $1,000.

In the meantime, we're finding value opportunities in high-quality names like coffee chain Starbucks (SBUX), where growth expectations are far lower.

Back in August, Starbucks' low-$50s share price implied near-zero growth for the next several years. While the company isn't the growth story it once was, Dan and I believed this outlook was far too negative. After all, the company continues to open thousands of new stores across the U.S. and China and is likely to be doing so for several more years.

Following the release of better-than-expected financial results last month, SBUX shareholders quickly realized this. Extreme Value subscribers are up about 30% in four months, and shares are now above our maximum buy price. Over the same period, many stocks – and growth stocks in particular – are down 10%-plus.

Last month, we recommended another well-known, high-quality, dividend-paying stock to our model portfolio...

Investors have priced this company for zero growth. As we explained in the November issue, if the company can achieve modest revenue growth of just 4%, the upside from here could be as much as 40%.

Current Extreme Value subscribers can access the November issue right here. And if you're interested in learning more about a subscription, click here.

New 52-week highs (as of 12/6/18): Essex Property Trust (ESS) and Under Armour (UA).

In today's mailbag, several subscribers share their initial thoughts on Dr. David "Doc" Eifrig's new Advanced Options advisory. As always, send your notes to feedback@stansberryresearch.com.

"I'm really looking forward to this new service from Doc. I am just about complete with the Master Course with one last section to complete.

"Doc's training has seriously upped my knowledge level of options 10X. I'm surprised I have done as well as I have on the self-assessments also. Along with Doc's [MBA], M.D., his pilot license, and wine success, he can add Teacher Extraordinaire to his resume." – Paid-up subscriber Harry D.

"Was going through the Advanced Options educational videos and saw an opportunity in LOW. I tried [one of Doc's strategies] on LOW… Sold it today for [a] net profit of about 23% in less than 2 days." – Paid-up subscriber Joeri V.

"I'm astounded by the incredible value Dr. Eifrig's new Advanced Options service offers to Alliance members as part of their membership. I understand options well, but cannot wait to learn from Doc.

"Since I became an Alliance member a couple years ago, the new services that have been provided as part of the membership have been nothing short of extraordinary, and Doc's may prove to be the best yet! Stansberry Research keeps its promises to Alliance members in a way that no other product or service I've ever seen does (except Richard Smith at TradeStops I have to say – he is just like Porter in this amazing regard).

"Thank you so much for continuing to amaze me with the seemingly endless benefits of making the commitment to be an Alliance Member! You have my support indefinitely..." – Paid-Up Stansberry Alliance member Shawn S.

Brill comment: We're very excited about Doc's latest service… his first new options product since he launched Retirement Trader almost nine years ago. And we're happy to hear so many subscribers are enjoying the incredible wealth of information Doc and his team provided with their new Advanced Options service… including a 55-page "Guide to Advanced Options"… a 27-video Master Course… and an accompanying workbook that walks subscribers through the service's two main trading strategies….

Doc's team has spent all year testing these trading strategies to provide how to take the top ideas from three of our flagship newsletters… and use them to generate triple-digit gains in a matter of two or three months.

Doc held a special event to unveil the service and explain how these trades work. To see a replay and learn how to sign up for Advance Options, click here.

Regards,

Mike Barrett Orlando, Florida December 7, 2018