The 5 fastest ways to improve your profit potential

Good morning! 👋

Secret trading systems and spending hours in front of your computer are totally overrated.

Wall Streeters, furus, and hustlers have been pumping this dream for as long as I can remember, but many investors have only recently started to get a handle on the bullshit... hidden risks, flawed tactics, “get rich quick” pumps-and-dumps, dark pools, manipulation, insider trading, PFOF, and more.

Keeping things simple is an entirely different proposition.

It’s also a path to investing success.

Let’s BBQ a few sacred cows.

#1: Focus on a few stocks rather than trying to master many.

Aspiring investors often fail because they try to screen for everything and, in doing so, often find nothing. Much of the software, screeners, and research out there intended to “help” leaves you with more questions than answers.

Flip that around.

Keeping your list super focused can help streamline your thinking and reduce the time you spend scanning. Counter-intuitively, that frees up brain power to focus on stocks that can actually make you money, tactics that work, and knowledge you need.

Thinking thematically helps.

For example, I use a proprietary framework I call the 5 Ds—Digitalization, Defense, Diffusion, Distribution and Dislocation—because I know every dollar I’ll make over the next 10 years is on that list.

Anything that’s not [on the list] isn’t worth my time or money.

#2: Think probabilities, not possibilities.

Many investors spin themselves into a black hole because they worry about all the nasties that might happen. The world’s most successful investors know better, which is why they start from a position of “Hey, let’s MAKE it happen.”

The stocks they buy reflect that.

You don’t see Warren Buffett, for example, buying little-known small caps, junk stocks, or SPACs, do you?

I don’t either.

#3: You can’t run with the big dogs if you stay on the porch.

Millions of investors stay on the sidelines because they fear the unknown, but the problem with that is one they don’t expect.

Missing opportunity is always more expensive than trying to avoid risks you can’t control.

Especially now.

The daunting reality is that most investors fail because they lack the long-term vision and perspective needed to get through short-term chaos.

If you do have that long-term vision and perspective, fear vanishes faster than an ice cube on a Texas summer day.

You can concentrate on success.

#4: Buy the best, ignore the rest.

Wall Street has taught generations of investors to diversify, and that worked for a long time.

These days, not so much.

In fact, there’s a good argument to be made that diversification holds you back and robs you of much-deserved profit potential. Benjamin Graham argued that 10–30 stocks would do it. Frank Reilly and Keith Brown found that 12–18 would account for 90% of the maximum benefit from diversification.

Charlie Munger, best known as Warren Buffett’s sidekick, says that “the idea of excessive diversification is madness … that guarantees ordinary results.”

I agree.

My research suggests that anything more than 20–25 stocks means you’re adding risk and reducing return, which is exactly the opposite of what you want.

Success in today’s markets comes from recognizing that much of what we’ve been taught to believe about the financial markets isn’t true any longer. Or never was.

Either way, investing in a new paradigm based on where the world is going is, I submit, far more valuable than one based on where it’s been.

#5: Be in to win, or you won’t… win.

I’ve heard from scores of investors over the years who are worried about the Fed, about politics, about reserve currencies, the P/E ratios, pandemics, and more. And I get where they’re coming from—those are all serious, very real concerns.

Here’s the thing most people simply don’t want to admit.

It never feels like a good time to invest. Yet, history shows that it almost always is.

How you do it is the game-changer.

Today’s markets are dominated by computers, highly manipulated and undeniably frustrating for many... but there’s not a lot we can do about that. So don’t waste your energy.

We—you and I—can, however, change up our game to take away Wall Street’s advantage.

We can pick great companies, especially those with the power to change our world and put up great numbers.

We can use tactics like married puts, inverse funds, spreads, and even good ol’-fashioned DCA/VCA to harness the volatility most people fear.

We can pick battles they have no interest in fighting.

Bottom Line

There’s always a way to play offense.

The sooner you come to terms with that, the sooner you can shift your thinking and get down to the business of making money. Even if you must think defensively to do it.

This isn’t rocket science when you think about it.

Learning to think positively is an advantage Wall Street cannot take away, no matter how much they’d like to.

Get started!

Today.

Now.

You got this, and I am with you every step of the way!

Keith 😊