ADVICE TO AVOID: 5 STOCK MARKET MYTHS
"When investing, stay with the winners unless there is a substantial
reason to sell, such, as the CEO dies or is selling off substantial portions of
his stock," advises Russell Cleveland. "When someone says a stock has grown enough,
or fears the market will crash or believes the economy is too weak, they will bully
you into selling a good performing stock. Resist that temptation-and you'll be richer
for it."
Here are five myths of investing that Russell advises we ignore:
MYTH 1: You never go broke taking a profit. If a stock doubles, take more of your money out and then play for free with the rest. Many believe once a stock gains substantially, say doubles in its price, it's time to leave it. But the fallacy with this strategy is that you're leaving a stock that is still a winner. If the same principles hold true now as for when you began investing in the stock, why would you leave what is sound fundamentally?
MYTH 2: Invest in a company that seems due to finally turn a profit, after it suffered millions in losses during its launch. Only invest in people with a winning track record. Losing a lot early on as a company first starts out is not a necessary requirement for success later.
MYTH 3: Invest with a CEO that has a great education pedigree. Most CEOs have college degrees, but the most successful entrepreneurs are self-educated and do not rely on advice from Ph.Ds in any one specific area. The best CEOs are lifetime students.
MYTH 4: Inherited CEOs inherit success. False. The best CEOs did not come from wealthy families. Frequently, the fact that they did not come from a wealthy family base actually motivated them to work hard to achieve their goals.
MYTH 5: Invest by industry only. There is nothing wrong with looking at an industry to see where a hot sector may be developing, but when it comes to looking at a specific stock, what you're looking at is not just its association to an industry, but core fundamentals about price to earnings ratio, who is the CEO, and how invested that CEO is in the company. It's easy to pick a wrong stock in the right industry, so only pick stocks that stand on their own merits.
4 STOCKS TO WATCH
In Finding Midas, Russell Cleveland identifies four stocks worth tracking and buying, as each one follows the principles of Entrepreneurial CEO Investing. "Today's greatest opportunities lie in the emerging businesses led by the types of entrepreneurial CEOs who have led before," proclaims Russell.
Google, Inc. has already
increased more than five fold from its initial offering price and is poised to continue
with solid growth. "Google is the best near-term example of what entrepreneurship
can do in a short time," notes Russell.
Whole Foods Market, Inc. has increased 22 times its initial offering price, capitalizing on the trend of consumers
eating healthy food, including naturally grown organic foods. "This company is a
classic example of how a strong leader with a clear vision can create value by being
in a business that is doing good in the world," says Russell.
Omnivision Technologies, Inc. has increased five times its initial offering price, making its money by providing
integrated single chip semiconductor imaging devices. "We think this company has
the makings of a mega-stock, with its strong entrepreneurial CEO who has a clear
vision for the future," notes Russell.
Comtech, Inc. has increased by 429% since its initial offering price. It is poised for growth, serving the 200 largest tech companies in China. "If the Entrepreneurial CEO Investing philosophy is correct, you should be able to 'ride' this investment for a long time," says Russell.
10 That Would Have Made You Rich
In Finding Midas, Russell Cleveland also identifies
10 different companies that best illustrate Entrepreneurial CEO Investing. As case
studies, he explores how these CEOs would have been worthwhile investments when
they took the helm.
The CEOs and their companies below would have yielded great
returns if you had would invested in their infancy. A $10,000 investment in Berkshire
Hathaway in 1965 would be worth $54.4 million today. The same investment in 1970
with Wal-Mart would be worth $60 million! Even a recent investment of $10,000 in
eBay, less than a decade ago, would now be worth $427,000. Here are the 10 CEOs
and companies:
Warren Buffett - Berkshirre
Hathaway
Michael Dell - Dell
Bill Gates
- Microsoft
Herb Kelleher - Southwest
Airlines
Meg Whitman - eBay
Lowry Mays
- Clear Channel
Sam Walton -
Wal-Mart
Angelo Mozlio - Countrywide
Financial
Howard Schultz - Starbucks
Finding Midas is available at your
local bookstore and Amazon.com
copyright @ 2007 finding midas cleveland. all rights reserved.