The Best Investment Advice I Ever Received

Written by Charles Mizrahi
Posted June 11, 2018 at 8:00PM

Most of my life, other than a few small stints, I was always my own boss.

The first time I ran my own “company” was when I was six years old.

We had just moved into a new house. My parents didn’t have enough money to send my brother and me to day camp.

That summer, I clipped an advertisement in the back of my Spider-Man comic book.

If you sold greeting cards, the headline read, you could make “Extra Money.

I mailed away, got the greeting cards, and sold them door-to-door on my block.

I opted for a prize: a microscope. That was one of the best summers of my life.

The Investing Advice That Changed My Life

During high school, I was a bookie taking bets on football games from my classmates. I made a ton of money.

I always loved being in charge of my own destiny.

When I started my money management firm when I was 23 years old, I was in a bit over my head.

Lucky for me, I was able to learn from very smart and successful clients.

One of my mentors encouraged me to start my own firm.  

I was on the phone with him almost every day. I asked his advice on everything, from how much I should pay a secretary to the kind of paper I should use for my letterhead. 

Owning and running a business is hard work.

After running into obstacles and being turned down by prospect after prospect, I started to doubt myself.

That’s when I called my mentor and asked if I could see him first thing in the morning.

What he told me not only changed my life but also made me a much better investor...

I was at his office at 8:30 a.m. He was already at his desk.

Just one look at my face told him everything he needed to know.

Before I even told him my doubts, frustrations, and the difficulties I was facing, he said, “Charles, my boy, focus on the big picture. Don’t let the short term get to you. Think long term.”

And that was it. He turned to his computer monitors and began trading.

I left his office in an even crappier headspace. “That’s it?” I thought. Think long term?

It took me a few weeks for that to seep into my thick head. I came to the conclusion that he was spot on.

I started to set quarterly goals for new clients. I was putting too much pressure on myself to perform on a short time scale. If I went a week without attracting any new investors, so what? I still have 12 more weeks to go.

I eventually gave myself annual goals... and that made the whole difference.

A few years later, I was an “overnight success.” Our firm was managing money for some of the biggest banks on Wall Street. And a couple of years after that, we were the number one advisor in the country.

The Dangers of Short-Term Thinking Investing

Long-term thinking had an even bigger impact on my investing.

When I was a floor trader, the long term was measured in hours.

When I started managing money, the long term was measured in months.

Now, I measure the long term in years. And it is now that I’ve had my biggest trades.

Stock investing has become very short-term focused. Investors make decisions on investing in stocks based on how the company's earnings met or exceeded company guidance or expectations. They focus on earnings every 13 weeks.

Short-term thinking, especially by companies, has a huge downside. Instead of having long-term strategies for the growth in their business, CEOs are worrying about making “their numbers” each quarter.

Warren Buffett and Jamie Dimon, CEO of JPMorgan Chase, are the financial world’s two most powerful leaders. They wrote an opinion piece in the Wall Street Journal calling for doing away with quarterly earnings guidance.

They said short-term earnings can distort managers' priorities. Managing for the short term takes managers' eyes off of spending on technology, hiring, and research and development.

While today’s spending will increase future growth, managers don’t want to show lower earnings in any one quarter. So they don’t invest in their business.

Buffett and Dimon went even further.

They said, “Short-term-oriented capital markets have discouraged companies with a longer-term view from going public at all, depriving the economy of innovation and opportunity.”

Short-term thinking is not only hurting companies; it’s also taking profits away from investors.

Don't Let Losses Scare You

As an individual investor, your biggest edge is investing long term.

Hedge funds and money managers have to keep their eyes on the short term, or else clients will leave them.

Your advantage is that you can buy a great stock and hold it for the long term. If it dips down, then add to your position.

Most of my best trades started out losing. But I didn’t care. I was in it for the long term — not months but years.

When I added Microsoft (MSFT) to the portfolio, it promptly fell 15%. I couldn’t have cared less. The company was solid and a leader in the industry.

Long-term thinking made me hold onto it. It is still in our portfolio and is higher by more than 400%.

In fact, we have five stock holdings that are up more than or close to 400% still in our portfolio. There is no way we could’ve had five stocks in the “400% club” if I focused on the short term. No way, no how. 

Stocks I Like

There are several stocks I really like now. They are solid companies that are trading for bargain prices.  

Brookfield Asset Management (BAM), Sirius XM Holdings (SIRI), and Micron Technology (MU) are just three stocks that come to mind.

We are up nicely on them, but the best is yet to come. These stocks have a long runway and could be the next members of my 400% club.

I’m about to recommend a company that is a leader in cloud storage. In fact, it is one of the only companies I know that found a way to make money with artificial intelligence (AI).

The first to hear about it will be my Park Avenue Investment Club readers. If you want in, just click here.

All my best,

Charles Mizrahi signature

Charles Mizrahi
Founder, Park Avenue Digest

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Charles cut his chops on the trading floor of the New York Futures Exchange before he moved on to become a wildly successful money manager on Wall Street.

And with more than 35 years of recommending stocks under his belt, Charles has knocked the cover off the ball. He's compiled an amazing record of success and posted gain after gain for his loyal readers. He's the founder of Park Avenue Investment Club and Insider Alert newsletters.

Charles is also the author of the highly acclaimed book Getting Started in Value Investing.

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