I wonder what would happen if we used our collective Dilbert-Blog-Reader brain to come up with stock investment tips. Let’s find out.
I don’t believe it’s wise to pick individual stocks based on factors such as the quality of management, quality of products, or projected cash flow. First, those things are unknowable because the information is filtered through known liars. Second, those factors are generally overwhelmed by luck, either good or bad.
For example, you could be the world’s shittiest manufacturer of bullets, but if WWIII breaks out, your stock will soar in spite of you. Conversely, you could be the best managed company with the best product ever, but if some pimple-faced genius in a garage stops looking at porn long enough to invent something better, you’re hosed.
I contend that the best way to pick stocks that will be big winners is to identify global trends before other people notice, and buy stocks in the companies that will benefit from those trends no matter how poorly they are managed.
Here’s one example to get the ball rolling. Recently an oil company bigwig gave a speech in which he predicted that the fastest growing fuel of the future would be coal. The United States has lots of it, and the technology for using coal cleanly and economically seems within grasp. He reasoned that the economics for “green” fuel sources (sun, wind, hydrogen, etc.) would never come close to the economics of coal. He predicted that the green energy sources would hover around 1% of the total need for the next few decades. And oil, as you know, will start to run out.
The question for your collective gigantic brains would be this:
1. Is the oil executive correct about coal’s future?
2. If he’s correct, what stock should you buy now?
That’s just one trend example. Do you have any more trend suggestions and/or stocks that would benefit?
The best trends are the ones that aren’t obvious to everyone (like the coal example). Keep that in mind.