Einstein Must Have Been A Terrible Investor
The Dynamic Wealth Report
January 28, 2010
by Robert Morris, Editor
Albert Einstein was one of the most influential scientists of all time.
His work led to the development of nuclear power, modern electronics,
and space travel.
Without his efforts, we probably wouldn’t have developed the atomic bomb
ending World War II. We wouldn’t have radios or television. And, we may
never have put men on the moon.
Einstein’s revolutionary discoveries propelled the world into the modern
age.
But, for all of his amazing achievements, I doubt Einstein had any
success investing in the market. Why do I think one of the most
brilliant men who ever lived didn’t make a dime in the market?
Well, if you take him at his word, he lacked an important quality that
successful investors must have. Here’s a famous quote from the father of
modern physics.
“I never think of the future. It comes soon enough.”
Now of course, Einstein was just having a bit of fun with us mere
mortals. He certainly thought quite a bit about the future.
But, this quote raises an important point for investors.
You have to have a vision of the future in order to consistently make
money in the market. And, you have to constantly update your vision as
new information becomes available.
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You see, the best investments are often made when present conditions are
at their worst.
Take last year for example.
The market bottomed in March. At that time, the financial system had
narrowly avoided melting down. Hundreds of thousands of workers were
losing their jobs every week. And, most experts feared the economy was
headed for another Great Depression.
The stock market had fallen to lows not seen in more than a decade. Stock valuations were at levels you might only see once or twice in a
lifetime.
Unfortunately, most individual investors didn’t buy stocks at the
bottom. In fact, most investors missed out entirely on one of the
greatest market rallies in history.
Why did this happen?
After taking heavy losses at the end of 2008, many investors were too
afraid to risk losing more money. They allowed themselves to be consumed
by negative news and doomsday prognostications.
What they needed was a vision of the future to give them confidence.
There were plenty of signs the market rally was for real. The Fed was
pumping liquidity into the financial system to prevent it from seizing
up. The U.S. government was bailing out the banks and spending billions
to stimulate the economy.
Most importantly, stocks were incredibly cheap on a historical basis.
With my vision for an improving economy and market in hand, I continued
making strategic investments in my own account. And, I kept recommending
stocks for my subscribers that I believed would skyrocket as the market
improved.
For example, in my Penny Speculator service, I recommended a retail
stock when economic conditions were still very bleak. In May 2009, I
told my subscribers to buy shares of premium denim jeans designer,
Joe’s
Jeans (NASDAQ: JOEZ).
Make no mistake, it was a gutsy call to recommend a retailer in that
economic environment.
Unemployment levels were rising every week. Consumers were putting
discretionary cash into savings or paying down debts. And, consumer
spending levels were falling rapidly.
But, I had my vision of the future to guide me.
I didn’t think JOEZ was going to go out of business. I believed they
made a product that many consumers would continue buying even in a bad
economy. And, I felt their business would grow as soon as the economy
began stabilizing.
You see, JOEZ has a very strong brand. And, their fundamentals were
already showing signs of improving. Revenues were rising… albeit slowly. And, the company was continuing to make money.
At the time, you could have picked up JOEZ for just $0.61 a share. It
turns out that was a very good price.

When I finally recommended selling the stock in December 2009, JOEZ was
trading at $1.29 a share.
Many of my subscribers booked gains of 111% in
just seven months’ time.
Now, I’m not trying to brag. (Well, maybe just a little.)
The point is you need to have a vision of the future if you’re going to
make serious money in the market. You won’t always be right. But, if you
make investments with an eye to what the future holds, you will improve
your chances of hitting the big winners when the opportunity arises.
In an interview with Bloomberg, PIMCO mutual fund manager, Bill Gross,
recommended investing in emerging markets like Brazil, China, and India. They offer high growth rates and are less prone to developing asset
bubbles. An easy way to gain exposure to these markets is through
country ETFs like: iShares MSCI Brazil Index Fund ETF (EWZ),
iShares
FTSE/Xinhua China 25 ETF (FXI), and PowerShares India (PIN).
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