Kaminsky's Call: Smart Tips for Investors
Morgan Stanley, Vice Chairman
Wanna make smarter investments?
Then you have to know how the vast majority of mediocre, yes that's right, mediocre, portfolio managers operate.
My "Call-to-Action" is a little counter-intuitive. Watch how the dumb money invests so you can make smart decisions.
Pretty much every portfolio manager is terrified of taking a chance and picking an unknown, losing stock. So instead, they flock to the Apples and IBMs of the world. And then they do the financial equivalent of waving the white flag: they pile into ETFs (exchange-traded funds).
Twenty years ago, before the domination of ETFs and index-betting, this was not the case, and stock-picking rightfully ruled, as managers with real talent and vision were able to rise above the masses.
But this is a brave new world, and unfortunately, courage is at a premium. While that is not a good thing for the industry, it can be good for you.
Remember, ETFs are just baskets of various other stocks. Many are flawed.
On yesterday’s show’s, Mark Fisher, Founder and Managing Member of MBF Asset Management, told us how he's creating his own ETF because he finds the USO, which tracks oil, inadequate.
Still, before you buy any equity, recognize that its placement in an ETF or index is just as important as any fundamental or technical research. In short, you have to identify the natural buyers.
By recognizing the herd mentality, you can stay in front of the pack.
- Energy Will Be the 'Ultimate Currency': CEO Mark Fisher
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- CNBC's Energy Market Overview
- CNBC's Green Energy & Alternative Energy
- CNBC's Carbon Challenge
- CNBC's Beyond the Barrel
"The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.