The average retail investor's stock portfolio is down 44% this year; What Moves the Stock Market; Am I in Boston or Las Vegas?
1) With the S&P 500 down 19% and the tech-heavy Nasdaq down 28% this year, I would have guessed that the average retail investor's portfolio would be down a lot as well, but I was shocked to learn just how much...
According to JPMorgan Chase (JPM), personal portfolios in the U.S. fell a horrifying 44% between early January and October 18, as you can see in this chart (from this Financial Times article):
I suspect the underperformance is due to the same reasons why the vast majority of mutual funds and hedge funds underperform the indexes: overweighting the most popular stocks and sectors at their peaks (i.e., chasing performance), selling winners while holding onto poorly performing stocks, trading costs, etc. Some good lessons here...
2) Speaking of which, as we go through another earnings season, it's important to keep in mind the wisdom in this simple graphic:
It illustrates an important truth: Over the long term, it's earnings, not sentiment, that determines stocks' performance.
As such, when finding the right investments over the long term, you want to be focusing on the highest quality winners – the type of stocks my colleague Herb Greenberg is identifying in his Empire Real Wealth newsletter.
As he put it in the inaugural issue late last month...
In investing, there's no such thing as "set it and forget it"... but this high-quality portfolio comes close...
Of course, these stocks could go down in any given quarter or year – especially during a bear market, but also on disappointing results or something else that spooks investors. But we're not recommending these for a quarter... or a year.
The power of this portfolio can be seen during the market's recent slide – it's down 3% over the past year while the S&P 500 is down 15%. But it outperforms in up markets, too, trouncing the market over the past three, five, and 10 years...
I know investing might be the last thing on your mind right now. But if you have patience and can avoid reacting to the market's every twist and turn, this is an incredible opportunity to own shares of world-class businesses that can help you build wealth in the years to come.
Right now, you can get access to Empire Real Wealth and the full portfolio of open recommendations for just $49 for the first year of a subscription. Even better, we're offering a 60-day, risk-free, money-back trial – get the details here.
3) In my June 2 e-mail, I wrote:
Nate Anderson of Hindenburg Research once again demonstrated why I consider him one of the best activist short sellers in the world when he released this damning report yesterday, sending the stock of his target, Enochian Biosciences (ENOB), crashing 28% to $3.76, which still leaves it with a $200 million market cap.
Why it's not at zero is beyond me... You cannot make this stuff up! Miracle Cures and Murder for Hire: How a Spoon-Bending Turkish Magician Built A $600 Million Nasdaq-Listed Scam Based on A Lifetime of Lies.
And in my June 28 e-mail, I added:
... the stock tumbled another 22% yesterday to $2.60 in the wake of this Wall Street Journal article that confirmed much of what Anderson wrote: Biotech Wizard Left a Trail of Fraud – Prosecutors Allege It Ended in Murder.
Sure enough, Enochian Biosciences is now under $2 per share (and, mark my words, heading to zero) as the company has essentially admitted everything Anderson said, suing the fraudster who it once identified as the "sole inventor" of its drug pipeline:
The Company also announced it filed a complaint against Serhat Gumrukcu, William Anderson Wittekind, SG & AW Holdings LLC, and Seraph Research Institute in the California Superior Court for Los Angeles County. As alleged in the complaint, the defendants engaged in a "concerted, deliberate scheme to alter, falsify, and misrepresent to the results of multiple studies supporting its and SARS-CoV-2/influenza pipelines." "Defendants manipulated negative results to reflect positive outcomes from various studies, and even fabricated studies out of whole cloth. Defendants' conduct amounts to nothing short of brazen fraud, which has caused Enochian substantial harm." Through this lawsuit, the Company "intends to hold Defendants responsible for their conduct and recover damages resulting" from their actions.
You can read the full complaint here.
4) Speaking of short selling, continuing my series on this topic, here are the next three slides from my presentation, "Lessons From 15 Years of Short Selling":
5) Take a look at these pictures of the Encore hotel and casino:
You'd think it's the one in Las Vegas, right? But it's the Encore Boston Harbor, the location of this year's annual Stansberry Conference. It's a $2.6 billion development, owned by Wynn Resorts (WYNN), that opened three years ago in my old hometown (I lived in the Boston area for eight years during college, working two years at the Boston Consulting Group, and then business school). I had no idea this place existed, or that gambling was allowed in Massachusetts!
Looking out the window of my room over the water brings back memories: I met my wife of 29 years when Bill Ackman and I crashed the Harvard Law School first-year student orientation boat cruise of Boston harbor in September 1990.
Best regards,
Whitney
P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.