How to Stay a Step Ahead of Wall Street: Cut Through the BS
“Charles, figure out how to discern BS from reality quickly, and you’ll be one step ahead of everyone else.”
Not a day passes by where I don’t think about this advice.
It was given to me by Henry Meininger. He was one of my mentors when I’d left the trading floor on Wall Street to start my own money-management firm in 1985.
When we met, I was looking to learn from anyone who had the patience to teach me the ropes of the advisory business. And I was referred to a marketing consultant who dressed impeccably and spoke English with a German accent … Henry.
Henry was born into a Jewish family in a little town in Hildesheim, Germany. But in December 1939, when he was 14, his family was forced to send him to a foster family in the U.S. in order to get him out of Nazi Germany.
After graduating high school, Henry was drafted into the U.S. Army and shipped off to Europe. This was in 1945. When his unit was deployed to his hometown, he learned that the Jews had been taken to the Theresienstadt concentration camp.
He went to the concentration camp — which had just been liberated by the Russians — and found both of his parents alive! Soon after, he took his parents back with him to America.
With this kind of experience in life, Henry didn’t have time for BS. And throughout the years, he gave me great advice for my business and life in general.
But his best advice was what he told me about knowing how to separate BS from reality. It’s helped me stay one step ahead of many investors when investing, and it can help you, too.
Cutting Through Wall Street’s BS
Henry said that being able to tell BS and reality apart helped him move forward in life and not waste time chasing after the wrong things.
And this same reasoning can be applied to the markets.
There are always media headlines, forecaster “predictions” and Wall Street noise out there. If you listen to them, it’s easy to waste your time over BS.
That’s why I make it a huge point to stick to the facts when it comes to my approach to stocks. By focusing on what a company is doing and where it’s headed, I can filter out all the other stuff.
Subscribers to my Lifetime Profits service know this very well. Here’s what I told them in October 2019:
Wall Street hates complexity. Analysts don’t take the time to roll up their sleeves, go through the numbers, see who’s running the company, look at boardroom shakeups and all that…
It’s much easier to press a computer button and run a screen of all the stocks selling below a certain price with momentum and that kind of stuff … but I don’t look at any of that.
I said this after adding Nuance Communications to our model portfolio. I liked the company for several reasons.
It was positioned in the growing tech industry. The tech space is huge, with plenty of tailwinds.
And Nuance had the leading software technology specializing in artificial intelligence and voice recognition. It had the solutions needed to address global fraud problems worth $4 trillion.
The company also had a rock-star CEO in Mark Benjamin. He came with a great track record working at other tech firms for decades.
The best part was that it had a special situation, which is what Lifetime Profits is all about. It was undergoing several changes to reduce the complexity in its business. And gems are found in complexity.
First, it was moving to a subscription-based service model. That means it would get paid for its software on a recurring basis. That would allow it to transform into a high-profit business.
Plus, it was also focusing on its health care and enterprise software solutions. It sold off and closed two business segments. And it spun off its auto business into a separate company, Cerence (which I would go on to also recommend two months later in December 2019).
This was too much flux for Wall Street, though. It wasn’t worth its time to research, and that meant it hadn’t fully priced in Nuance’s upcoming changes to its business.
Back then, if you’d listened to the noise from analysts on Wall Street — or the financial media — you would’ve passed over the company. But I was able to cut through the confusion and stay one step ahead. I saw the opportunity it provided for my readers.
Fast forward almost two years, and everything is starting to play out. In fact, tech giant Microsoft recently announced it’s buying Nuance in a nearly $20 billion all-cash deal. That shows just how valuable Nuance’s software is.
And Lifetime Profits readers have benefitted. We’re up by over 254% on Nuance and over 341% on Cerence! So, Henry’s advice on BS and applying that approach to the market paid off handsomely once again.
And the good news is that there are many more opportunities out there in the market just like this. You still have time to take advantage of them even today…
So What’s Next?
Last week, I saw a similar special-situation opportunity that Wall Street is overlooking.
This company has a solid balance sheet and leads a growing industry. It also has plans to expand its presence and capture more market share.
And it has rock-star leadership in a chairman with a wealth of industry experience. Since management has over a 50% stake in the company, it’s focused on creating shareholder value because it has skin in the game.
Much like with Nuance and Cerence, Wall Street is misunderstanding this company’s business model. And as it’s a small cap and foreign company, analysts have decided it’s not worth their time.
Once again, if you were listening to the BS from Wall Street or the financial media, you would pass over this company. But I knew where to look and cut through the noise. So, if you don’t want to miss out on this opportunity, consider joining my Lifetime Profits readers on the path to more potentially huge gains — we’re targeting 500% in five years or less.
And remember, my team and I always cut through the BS in the markets for you. We tell it to you straight to give you a clear sight to gains like those on Nuance and Cerence. And we have plenty more of these opportunities coming your way. Stay tuned!
Founder, Alpha Investor