Take the Pressure Off With This Investment Superpower

The Weekend Edition is pulled from the daily Stansberry Digest.

Take it from someone who has had his hands on $500 billion of assets...

Being responsible for so much money has plenty of positives – but freedom from that responsibility has advantages, too.

So says David Daglio, the former chief investment officer at BNY Mellon, where he helped lead a team that oversaw $500 billion worth of investments. Dan Ferris and I interviewed David on an episode of the Stansberry Investor Hour podcast in April. And it was a real treat...

David spent 22 years at Mellon, then last year founded his own (relatively smaller) asset management firm, which was then quickly acquired by a multibillion-dollar multifamily office.

So, he has fresh, firsthand experience and knowledge about how the "big guys" operate.

David also shares many of our interests at Stansberry Research... in terms of guiding individual investors with a "contrarian" bent.

That's how he started investing in his 20s in his free time. And with two decades of experience at one of the biggest banks in the world behind him, the approach still colors his thinking now, in his new role as chief investment officer of wealth-advisory firm TwinFocus...

I think I'm at the perfect-sized firm today. The disadvantage of being at a very large firm is sometimes we see great ideas... but if we can't put $1 billion to work, it's not worth doing...

Our total client base today is $8.5 billion, so that means if we find an idea where we can put $10 or $20 million to work and get good returns, we can, but we're also large enough so we get inbound calls from every single firm in the world... But I have the ability to be nimble.

In other words, the less money you are "required" to put to work, the wider the investment universe can be, and the more flexible you can be.

And while David was talking about the difference between the biggest asset managers and their smaller rivals, what I want to tell you today is that the same secret works for individual investors...

I asked David what this means for someone like you or me – someone who is "doing this for themselves"...

No doubt, those who work on Wall Street have certain advantages. As David said...

The ability to do deep fundamental work really rapidly was staggering... If anything, our problem at these big firms was figuring out what to listen to.

But individual investors, he said, can have an advantage by actually having less information to sift through. It can be easier for them to determine what sources they trust and use those to fit their unique goals and investment style.

Best of all, as David added...

I think the advantage a retail investor has and, frankly, I have in my personal account as well, is I don't have a boss. The biggest problem with being a portfolio manager – I was for 20 years running small-cap hedge funds, etc. – I used to say I didn't have a boss, but the practical reality is my top 100 clients were my bosses.

Every quarter, they asked me the same question, "How did you do last quarter?" And I would say, "I'm going to tell you how I did last quarter, but we're investing in ideas that we think are great ideas for the next three to five." It took me 15 years and probably 15,000 meetings to get the majority of my clients to stop asking about the next 90 days. I was in a privileged position.

Most, if not all, people at good firms have an enormous amount of pressure to perform in the short run, and we can see that in the market today.

He went on to talk about the number of active professional portfolio managers who were "underweight" chipmaker Nvidia (NVDA) a year ago and how that number has dwindled today because of the "fear of missing out."

You can watch the entire interview here on YouTube. You can also listen to the full audio version at InvestorHour.com or wherever you get your podcasts.

Like I said, David – who also spoke at our annual Stansberry Research conference last year in Las Vegas – shared fantastic insights that I think are worth listening to...

For instance, the episode's title refers to the idea of buying "straw hats in winter"...

That is, you want to look for assets that go on sale when no one is buying them. It's like getting your Christmas decorations at half price from the clearance bin in January.

Over the years, our colleague Dr. David "Doc" Eifrig has talked about the advantage individual investors have, too...

And it goes beyond the idea of being nimble enough to buy "straw hats" at the right time.

That's because doing it for yourself relieves another kind of pressure...

In one issue of Doc's Income Intelligence newsletter back in 2021, he wrote about the fact that individual investors enjoy the "superpower" of "permanent capital" – their own money to work with.

You see, folks who work at major investment firms live in constant worry about clients withdrawing their funds. As Doc wrote...

Put yourself in the shoes of a professional portfolio manager. Each year – likely each quarter – he or she needs to keep up with the market to maintain the clientele.

If the market returns 8.2%, 5.8%, 11.7%, or 8.5%, like it has done in the past four quarters, the professional better match or beat those returns. Otherwise, the money starts flowing out.

But this leads to perverse – and destructive – incentives like performance chasing and the inability to step back from the market.

Look, everyone knows this market is crazy. We all understand that stocks have premium valuations that can't be sustained indefinitely... And many have valuations they can't conceivably grow into.

But if you have to make that quarterly number, you have no reason to take your foot off the gas pedal. If the richest, most expensive stocks keep rising and driving the market, you better own them, just like everyone else.

If you decide to worry about a bear market and apply a safer investment approach, you get left in the dust. The money flows out and you lose your job.

The faster and more wildly the market rises, the bigger this problem becomes. That dynamic encourages portfolio managers to keep buying the big performers, fueling the rally even further.

Individual investors may worry about their own short-term emotions and performance. But as Doc said, they don't have to worry about this lure of the quarterly number.

Unlike those professionals, you have permanent capital...

It's your money, and it's not going anywhere you don't want it to. So you can behave as you see fit. As Doc continued...

You shouldn't care about relative performance or quarterly numbers. If you take your foot off the risk accelerator, you may not match the market in its strongest quarter. You can't keep outpacing the market without taking the full-blown risk. Reducing risk will generally lead to better returns – but not this quarter. Maybe not even this year. But you have the ability to wait it out.

You can invest through the cycle of ups and downs...

You can tone down your risk and earn a positive absolute return on your capital, while potentially underperforming, relative to the market. But when you review the cumulative returns over time, it will be worth the short-term sacrifice of greed...

In other words, you should be willing to hold investments that promise solid returns, even if they aren't the hottest holdings in today's market. That's because your performance is beholden to no one's expectations but your own.

Doc used to work on the trading desk for the elite investment firm Goldman Sachs in the 1980s. So he speaks from experience. And he has built one of the strongest track records in the investment-newsletter business... frequently earning top grades in our annual Stansberry Research Report Card.

Arguably, his most successful publication is Retirement Trader, where he applies a trading strategy that has thrived for decades, no matter the investing environment.

That's how Doc ultimately racked up a record streak of 211 consecutive winning trades in Retirement Trader. He has posted roughly 20% annualized returns in each of the past three years... And he enjoys a 94% win rate since launching the service way back in 2010.

Doc's strategy allows individual investors to be swift and flexible. They can take the "other side" in the market – often opposite the pros – to make money again and again on their "permanent capital"... based on their own goals and timelines.

Much like it makes sense to "buy straw hats in winter," it makes the most sense to sell them in summer...

Like selling Christmas decorations in November and December, that's when you can charge a premium. This is the idea behind Doc's strategy in Retirement Trader.

When most people think about options, they tend to think of buying them to juice returns. But that comes with higher risk. As Doc has told his subscribers, there's a much better way...

Today, people think of options as risky. But their real role – dating back to their innovation – is to reduce investor risk.

Stock options are one of the most misunderstood and misused financial vehicles on Earth. The popular press, and even your broker, will tell you options are guaranteed to lead to financial ruin. But it's just not true... if you understand how to trade them.

Rather than buying options in Retirement Trader, Doc sells them – much like an insurance company does for any number of items or property. You can make money by selling this kind of stock "insurance" to worried investors in times of fear.

Individual investors have the ability to do this themselves – and with a smaller amount of capital than larger firms would want to put to work.

The harder part is knowing what you're doing. But Doc has that covered. He has taught hundreds of thousands of subscribers how to use this strategy over the years.

We've heard from plenty of happy subscribers who have used the Retirement Trader strategy with great success over the years to generate more money during or for their retirement, or even from folks who are simply looking to boost their income.

Doc has his win rate and high annualized returns because he can zig when Wall Street is zagging...

Too many folks in the market are obsessed with the short term. That's why it seems like most investors can't think around the next corner... because, often, they can't.

That's why you need the conviction and opportunity to not worry about "the last 90 days," as David Daglio put it. Instead, think about the long term.

If you can even begin to consider what's coming next, it's more of a superpower than you might even think. Then, if you can put this analysis into action, even better.

Right now, Doc is showing just how easy it is to learn this options strategy...

His No. 1 favorite trading strategy is not something you hear about in the mainstream, but it works. Doc went four years without a single losing trade. You don't do that by following the crowd.

Especially if you're looking to add to your income in retirement, you owe it to yourself to learn this strategy... But anyone can put it to good use if you're looking for more cash for any reason.

Click here to learn more details right now directly from Doc. In this free demo, he talks about why this particular strategy works so well – and how you can get started with it today.

And, if nothing else, let me leave you with this recommendation: Be your own financial boss as much as possible. Because while money can't buy happiness, it can help you find it... And doing things your way might be one of the biggest joys there is.

Good investing,

Corey McLaughlin

Editor's note: Doc has booked a 94% success rate in Retirement Trader since 2010. And to show exactly how it works, he has enlisted PGA Tour golf pro Kevin Kisner for a demonstration. They'll put on a trade in Kevin's personal brokerage account – with real money – and try to collect $4,000 in 60 seconds... Check out the video right here.