Using TradeStops to Beat Billionaire Investors

 

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Tom Meyer: Hello, everyone. Welcome to TradeStops. My name is Tom Meyer, and I’m pleased to be joined today by Naresh Vissa, our director of special events. Good afternoon, Naresh.
Naresh Vissa: Hey, Tom. Good to talk to you again.
Tom: We’ve got a terrific presentation today. We’re very excited to have welcomed thousands of new TradeStops members in the past few weeks.
Our customer success team has been working their way through thousands of calls and emails, and they’re slowly getting caught up. We do appreciate everyone’s patience as we continue to answer the questions.
Hopefully, today’s presentation will answer many of your questions and help you on your way to using the TradeStops site effectively and easily. We are planning more training webinars over the next few weeks. You’ll see them posted on the website, and you’ll receive emails with the registration links.
We are recording the presentation today and we’ll send you a link to the recording later today or tomorrow morning. If there’s something you don’t understand, you’ll be able to review the presentation at your convenience.
TradeStops is the one tool that can help you become a more successful investor from the very first time you log in. Dr. Smith and his team have spent years analyzing the risks of individual stocks and portfolios.
Our TradeStops’ members are the beneficiaries of this research.
We do have members of our customer success team answering your questions during the webinar. We’ll also answer some of your questions during and at the end of the presentation.
Today’s webinar will be a little shorter, as it is more focused. We encourage you to ask a lot of questions. There is a question box on your screen, and you can ask them there. We have Gail, Haidee, Brian, Marina, Albert answering them today.
This is why we have the golden state lawyers of customer success teams answering your questions.
Naresh Vissa: I like that.
Tom: Today, our focus is going to be on the Billionaire’s Club within TradeStops. This is only available to lifetime members of TradeStops and it’s an incredibly valuable tool to use.
Naresh, last year, we offered our lifetime members webinars and presentations with Dr. Smith, just for them, as well as research that we delivered on a monthly basis, just for lifetime members.
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We’ve stepped it up this year by offering the Billionaire’s portfolios as well as the Pure Quant tool. The strides that we have made within TradeStops are incredible.
What if I told you, Naresh, that there is a way to have literally hundreds of MBAs doing research for you, research that would cost millions of dollars if you could even pay for it? That’s what we have with the Billionaire’s portfolio. Go ahead.
Naresh: I was going to say that sounds amazing. That’s obviously a very, very expensive undertaking and a very time extensive undertaking as well. Like you said, we have that available for people, which is a simple cost that all you attendees have already paid for.
Tom: After that, we’re going to show you how to use the Pure Quant tool to find the best stocks that the billionaires own for your own personal portfolio. These best stocks have outperformed the billionaires by greater than two-to-one over a long period of time. We’re going to show you how to put that together and use the Pure Quant tool.
Let’s go ahead and get started. We’re going to do things just a little bit differently today than we’ve done on some of our other training webinars.
Naresh, we’re going to stick with the PowerPoint presentation for the first part. We’re going to move to the website. Move around the website and show people how they can get to the billionaires portfolios. How they can watch a lot of these stocks on their own and then put together the Pure Quant portfolios, which is the ultimate billionaire portfolio.
Naresh: That sounds good.
Tom: You know the answer to this. We’ve used this quote in a few of our webinars, as well as our editorials. Naresh, who said this?
“It’s a huge structural advantage not to have a lot of money. I think I could make you 50 percent a year on $1 million. No, I know I could. I guarantee that.” You know who it is Naresh.
Naresh: It’s Warren Buffet.
Tom: Absolutely. Warren Buffet believes that most of our TradeStops members, because they’re not billionaires, because they have the advantage of being able to be more nimble, not have to report their holdings, able to get in and get out at a moment’s notice, we as smaller investors have a huge advantage over the big guys.
We’re going to show you how to do that.
Have you ever wanted to know how the billionaires invest their own money? Have you ever wondered how you could benefit from their investment prowess? Have you ever thought about buying what they buy?
Today, we’re going to look at that. We’re going to meet the billionaires who control Wall Street. We’re going to see what investments they make in their portfolios, how you as a lifetime member of TradeStops can access their portfolios.
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We’re going to X-ray their holdings. We’re going to build the ultimate billionaire’s portfolio. Let’s go ahead and meet the billionaires.
Here are some of the names that you know. You certainly know Warren Buffett, the Oracle of Omaha. You know the names, Carl Icahn, George Soros, and Bill Ackman. Names you might not know include David Einhorn who shorted Lehman Brothers into the 2008 crash.
Prem Watsa is considered the Warren Buffett of Canada, and David Tepper was called the greatest hedge fund manager of this generation by “Forbes.” Here’s some other names you might not know — James Barrow, Seth Klarman, Susan Desmond-Hellman who was managing the Bill Gates Charitable Trust, Manish Oberoi and Bruce Berkowitz.
What are their investment styles? Naresh, one of the things that we have looked at and we’ll show everyone a little bit later is that they all have similar styles. Let’s look into these. Warren Buffett talks about buying stocks that have what he calls intrinsic value.
In his own annual report, he describes stocks with intrinsic value as “the discounted value of the cash that can be pulled out of the company over the remaining life of the company.”
We know that Warren Buffett has held Wells Fargo for almost 30 years, Coca-Cola for over 30 years. He’s looking at stocks that generate cash and that he can pull cash out of over a long period of time.
Carl Icahn is an activist contrarian. He’s looking for companies with prices that reflect a poor PE ratio or stocks that are trading underneath their book value. Again, that would describe a type of value investor.
Bill Ackman who will go long or short, invest in value stocks with all of the fundamental research done internally.
All of these money managers and all of these billionaires conduct their fundamental research internally. We know that Ackman had the big mistake with Valeant.
We’re not going to cover that today, but Valeant will never be considered a value stock. However, compared to other stocks within that sector, within the industry, Ackman consider Valeant to be a value play.
Almost all the billionaires have one thing in common. They are what we would consider to be value investors. They use fundamental analysis to determine which stocks they want to own. Their holding periods can be months or years at a time.
The question that we have for you, our TradeStops members, do you want to know what they own? Do you want to know what they’re buying and selling? Most importantly, which stocks do they own are the best ones for your portfolio?
With TradeStops, it’s easy to know. We’ll show you on the website here in just a moment. You start off in the newsletter section. When you click on the newsletter section on the far left-hand side, you’ll see the TradeStops Billionaire’s Club. That’s where we’ll be going shortly.
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When you go there, you’re going to see all of the billionaires that we have listed, 14 of them on the left-hand side. You can click on any of these and you’ll be able to pull up their holdings.
Now, we will go to the website and show you what they’ve been buying, what they’ve been selling, and what the TradeStops tools are showing with the stocks.
Again, here at the 14. We’ve got 14 of the largest fund managers in the world with hundreds of billions of dollars under management. These are the people that move the markets.
Again, as we talked earlier, this is like having access to millions of dollars of research from the world’s most successful money managers. You don’t pay any extra for this. For those who have been lifetime members for a while, it didn’t cost them anything to get this upgrade, and yet they have all of this available to them.
Now that you have all of it available, how can you benefit from it? We ran an article either earlier in the week, or I think it was earlier this week on Tuesday, one of Dr. Smith’s editorials.
We talked about three men. This is a quote from Richard Wyckoff from 1933. “Three men came to Wall Street. The first always knew what was the best buy. The second knew why it was the best to buy. The third knew neither of these things. He only knew when to buy. He’s the one who made the most money.”
Spend that way forever in the market. The billionaires know what to buy, and they know why they want to buy it. With TradeStops, we can help you know when to buy. The TradeStops methodology gives you the third man advantage.
Another Warren Buffett quote, “You shouldn’t own common stocks if a 50 percent decrease in their value in a short period of time would cause you acute distress.”
Naresh, you think anyone was distressed in 2008 and early 2009 when the market dropped in half?
Naresh: I would say the vast majority of people were very, very distressed and probably did think that they should not have been doing during that time.
Tom: Warren Buffett is setting the table and telling you that a 50 percent decline is not uncommon. We’ve had a lot of people talk about when the next decline is going to happen in the current stock market. Nobody knows. It could be ugly.
We’ve seen 50 percent declines before. We’ll see them in the future as well.
Why would Warren Buffett say that? Take a look from 2007 to 2009. Warren Buffett’s portfolio is the black line, and look how much he dropped.
The portfolio stocks was up 150 percent, down to barely above breakeven. He lost a huge chunk of money because of that 50 percent decline. He was telling you, it’s going to happen.
Using the TradeStops third man advantage, we lost a little bit. During the downturn, it went to cache and have outperformed dramatically since. Using Warren Buffett’s stocks, his original
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return since the year 2000 just on that long socks only, up about 420 percent, outperforming the S&P 500 dramatically.
Using the TradeStops methodology, up 510 percent. Same thing with Ackman, we’re going back to 2006 here. He’s done very well, up 182 percent. TradeStops up to 246 percent.
Carl Icahn up 413 percent since 2004. He was skyrocketing in the early to mid-2000s, but, boy, did he take a hit or what during the downturn? Since then, TradeStops has outperformed dramatically over the entire period of time, up 718 percent versus up 413 percent for Icahn.
When we construct the ultimate Billionaire’s portfolio, these are the rules that we’re going to follow. We’re going to only invest in stocks that are in the SSI Green Zone. We’re going to remove all stocks that have a VQ of greater than 40 percent.
The billionaire’s stock must have a profit since entering the position. The maximum number of positions is 20, sorted in ascending order for days in the SSI Green Zone. That means, we are looking for the stocks that are just now entering the SSI Green Zone.
The minimum number of positions is 10. If there are less than 10 positions, you sell everything. We’re going to be looking at portfolios that combine to have over 500 stocks.
If there are less than 10 stocks that are worth buying, maybe that tells you that we’ve got a correction to maybe a bear market coming up very soon. Just go to cache if there are less than 10.
You sell a stock when the SSI stop is triggered, but you wait until the beginning of the next month to replace that stock. You’ll replace the sold stocks, at the beginning of the month, with the stocks at the top of the Pure Quant list.
You’ll run that Pure Quant program again, and you’ll see which stocks are at the list, and then you’ll rebalance those stocks. Using this Quant tool — again, going back 2002 — the billionaire’s overall up 143 percent. Using our tool, up 338 percent.
This is not guaranteed to double every year. Over the course of a long period of time, you follow these rules, you’re going to be investing in the best stocks fundamentally. The billionaires have already determined that.
You’re going to be investing in the stocks that are performing the best technically based on the TradeStops algorithms. When the market goes bad, these same algorithms will get you out.
We know Dr. Smith likes to talk about successful investing. It’s about staying in the game. Let’s go to the website. Let’s work with the billionaires. Here we are on the tradestops.com home page.
Before we go anywhere, Naresh, I want to click on this webinars link. This is where we post the webinars, the recording of which will be up a little bit later today. We’ve also posted our on-demand webinars from the last few weeks.
If you’ve missed something, you’re able to get back in and view the recording. You can start and stop that at any time. If you get stuck somewhere, you’ll be able to get unstuck.
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Certainly, feel free to join us. We’ll be posting more of these. I believe we plan on putting transcripts for the webinars up here as well. I don’t know if that’s been posted yet, but I think we’ve got a couple of them coming up in the next day or two.
Isn’t that correct, Naresh?
Naresh: Yes, absolutely. We have to two transcripts already up for our…one from two weeks ago, that was our first training session and then one training session from last week. We’re going to have the rest of the transcripts up by this weekend.
Stay tuned to…
Tom: Thank you so much.
Naresh: …tradestops.com/webinars link. By the end of next week, we’ll have all the transcripts up for all the different training sessions that we’re doing.
Tom: Thank you for taking care of that. We think we have a number of people that find it easier to follow along at their pace using the transcripts. Thank you for making sure that that got taken care of. That’s a real benefit for many of our TradeStops members.
Let’s go ahead and log in. Click the log in. Get this done quickly. For those who haven’t logged in, this is how you go about doing it. Keep myself logged in for two weeks. I’m going to close our chat window.
Let’s go straight to the Billionaires. To get there, we click on newsletters, right here at the top left. TradeStops Billionaire’s Club. Again, you do have to be a lifetime member of TradeStops to access this. We click here and as you saw earlier, this is what the screen looks like.
To look at the different portfolios, you just pull down the left-hand side. We’ll click on Warren Buffett, and you can see the stocks that he owns. We show you by ticker, by the name of the company. What did he do?
The group is the latest action taken. The reference date is the date the stock was first bought, and advices the date of the latest update. You can see that he increased his ownership of Sirius in the first quarter of 2017.
What the price was? The latest close? This is the 13F filing. This is where we gather all of this information, the SEC 13F filings. It showed a three percent increase in the number of shares held. Now, we have the TradeStops tools — the VQ percent, the SSI stop and the SSI condition.
That’s Warren Buffett. Let’s take a look at Carl Icahn.
We have one report from the end of March on Welbilt, it’s a new holding, VQ of 24.3 percent. You’ll notice that this has a gray box under SSI with a little X through that.
What that means is that the stock has not been trading long enough to give an SSI signal. A stock needs to be trading at least one year to develop a volatility quotient, the VQ percent, but it must be trading at least two years to develop a Stock State Indicator.
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Most stocks you’re going to see have the Stock State Indicators. Red, which means it stopped out. Green, which means it has hit an entry price in the past. Yellow means that it’s technically still green, but it has dropped more than 50 percent between the most recent high and the stop price.
We give you all of this information. If it is gray, there’s less information that’s available. That’s all.
We can go look at David Einhorn, a number of things that had been updated at the end of March — new holdings, and Clipper Reit, Varex, Alere, and Micron.
A number of these with, again, relatively new stocks that are trading, because they don’t have an SSI, but it has a 25.0 percent. Most likely, that means it’s been trading for less than a year. We use the default of 25 percent as the VQ for new stocks.
This is how you look at the individual portfolios and you can scroll down. You can sort this by the different columns. If I want to look at alphabetically the ticker and I’m not worried about what the reference date is. If I want to sort by the VQ percent, here’s the stock with the 60.5 percent VQ, etc., etc.
You can control this the way that you like. The default is from the date that the billionaire first owned the stock. You’re able to see how well they’ve done in the stock in that period of time.
It’s easy to create a separate watched portfolio, so you could focus in. Let’s take this David Einhorn portfolio. Let’s add this as a watched portfolio. We click on that and it will set up under our portfolios. Here we go. Your portfolio has been added successfully. We click on portfolios and here’s our David Einhorn.
We can click on that. These are all the stocks. I have this set up so that it does alphabetically and I can see the stocks by their ticker symbol. This sets up as one share each, just so that we can get a feel for…If we want to use this and manipulate the portfolio a little bit.
I could if I wanted to. I can sort by SSI and we can get rid of all of the gray SSIs. Just click on all those that are gray. Click on delete. Now everything here is green, yellow, or red. It’s got a lot of stocks that are in the red. Let’s take a look at the VQ percent. Let’s get rid of all the stocks that have a high VQ.
Let’s get rid of all the stocks that are above 40 percent. We’ve got a couple of them here. Here we go. We’ll keep the 37.8 percent. We’ll delete these two. If we wanted to delete all the red, we can do that. See how easy it is to work with this, Naresh?
Now, we can take a look at the Einhorn portfolio and find out which stocks does he own that technically are in a good position, and that’s what we have here. We have…missed these two.
Now, we have a portfolio of nothing but stocks that are in the red zone and the yellow zone. It’s a neat way. You can take any of the billionaires and create these watched portfolios if you just want to watch their particular stocks. Let’s go back to the Billionaire’s Club.
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Naresh: I want to mention one thing, Tom, before you go back to the Billionaire’s Club. You talked about reference dates. One clarification, the reference date that you mentioned is actually the first date that the stock was filled SEC. The increase or decrease is the latest activity.
Tom: The latest activity as reported on the 13F filings.
Naresh: Exactly.
Tom: Correct. OK, good. Thank you. I appreciate that.
Again, here we have these 14. Let’s take a look at the Pure Quant tool. What if I want to build the best, the ultimate portfolio using the 500-plus stocks that these 14 investors owned? It’s simple. For here, we’re going to go to research. We’re going to click on Pure Quant. This becomes simple.
By the way, there is a video, if you’d like to watch that video. The Pure Quant is available to lifetime members only. It’s not just for the billionaires, you can use other newsletters, you can use your own watch lists, etc.
Let’s go ahead and we’re going to select multiple portfolios. That selection is down here at the bottom. Here, we do have to enter these one at a time. It will take just a moment to get these added.
We do have this sorted in this tool alphabetically. We can see what we’ve done. There’s David Tepper. I think whenever I look at George Soros’ name, I think of the villain in the old movies. He would definitely be cast that way.
Naresh: [laughs] Yeah, certainly.
Tom: Just a couple more to go here. Seth Klarman and then we will add Warren Buffett in here.
We’ve got all 14 of the billionaires in here. How much do we want to invest in our new portfolio? Let’s invest a $100,000. How many positions do we want? We want to have the 20 positions, because we’re looking at 500 stocks. Let’s try to get the 20 best stocks here.
All we have to do now is click run research and those rules that we went over a little earlier, all of that has been done automatically. Here are the stocks that you’re going to be owning. You can save this as a new portfolio. Here are the VQ percents, the latest close.
The position size, we automatically do the position sizing for you. In SSD, for instance, it will be a 6.05 percent, WTM 7.11 percent, but in COP only 3.72 percent is the size.
This way we’re taking equal risk per position. Almost one percent of the position itself is what we’re taking as risk. Right here, the position size, it’s about $600 in risk. It’s about $600 in risk for each of the 20 positions.
If I want to save this as a new portfolio, I’ll set at Pure Quant, there’s our watch only. Let’s save this and then we’ll go to our positions and alerts. It will automatically open up. Here we go,
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$100,000. We’re actually investing about $99,000 and this is what that portfolio looks like. It’s incredible.
Here’s something else. We took all 14 of the billionaires. What if we only want to take just a few of them? In this case, we’ll go back to the Pure Quant. What if I only want to look at Warren Buffett, Carl Icahn, and Bill Gates? We use the same procedure, select multiple portfolios.
We know the Warren Buffett one is down at the bottom. Bill Gates should be towards the top. Lastly is Carl Icahn. Here, let’s maybe just do a $50,000 portfolio, Naresh. I don’t need to put the comma in there, $50,000. We’ll do 15 positions here. Run our research. There we go.
Just using those three — Warren Buffett, Carl Icahn, Bill Gates — these are the 15 positions that you would own — Goldman Sachs, DaVita, Wells Fargo, etc. We can save that as our new portfolio. I’m going to rename this something a little bit different. I think “Buffett, Icahn, Gates.” Here we go. This is what it looks like in TradeStops.
If we were decided to do this and we wanted to add SSI alerts to all the positions, it’s really simple. Just click this box at the top. We’re going to add an alert, SSI alert. There you go, Naresh. Very simple. We go to our alerts just to verify. AIG, we have the Stock State Indicator alert, all of these have the Stock State Indicator alert.
That’s how simple it is to leverage the research of the best investors in the world and get this research to work for you to build the best portfolio that you can possibly have.
One last thing, Naresh, before we go to the questions. As we always like to point out during these presentations, our help center will answer a lot of questions. Feel free to go here. Click on the help center. Most every question that you want answered, probably 90 percent of the questions that you need to have answered, you can find here on the help center.
We are going to be answering some questions now, but we don’t have time to answer everybody’s questions. Feel free to call us at 866-385-2076 between 9:00 and 5:00 Eastern Time. We’re located in Florida, or send an email to support@tradestops.com.
We have answered a lot of questions and phone calls over the last few weeks. It seems like our customer success team is getting pretty close to being caught up. Your question should be answered pretty quickly.
Naresh, what do we have that people want to know about right now?
Naresh: Let’s get to some questions. First, Tony with a good question.
“In order to apply back testing, you must assume you sell at the stop and buy back at the new entry price. Is this correct, and is that a fair analysis?”
Tom: That is correct. Built into the Pure Quant when working with the billionaires is the stock has to be in the SSI green zone. All of the stocks have to be in the SSI green zone. If a billionaire has a stock that he owns but it gets stopped out, then you will go ahead and sell that within your TradeStops portfolio because it hit the SSI stop.
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If the billionaire still owns it and it eventually triggers a new entry signal, a new SSI entry signal, then it’s possible that that could be added to the portfolio at another time when you’re doing the rebalancing.
Naresh: Next question is from John.
“Many of these billionaires short the market. Does TradeStops also advise short positions with the Quant and if so, can you show me?”
Tom: The answer is no, we’re not working with short positions. We are working with long positions only. The reason for that is it is much easier to generate volatility quotients over a long period of time, Stock State Indicators over a long period of time on the long side.
When we have bear markets, those tend to be very violent. They tend to last a relatively short period of time. We very rarely have bare markets that last more than a year and a half or two years. Yet, we can have bull markets that can last five, six, seven, eight years at a time.
From an algorithmic point of view, it’s much easier to get a really good determination of the stock and determine its normal volatility on the bullish side. We have been looking at some things on the bear side. Keep in mind, we haven’t had a bear market in, what, nine years?
The type of back testing that’s required is more difficult than the testing that we do on the long side.
Naresh: Piggybacking on what you just said, Vincent is asking if it’s advisable to short a stock when it enters the red zone?
Tom: If you are someone who does like to short, it’s a decision that you’ll have to make. If a stock stops out but we’re still bullish on so many of the stocks, we think it’s just better to find a stock that’s in the green zone or just coming in to the green zone and manage your portfolio that way.
If we go back to looking at the back testing, you’ll remember that we looked at the Warren Buffett example and how TradeStops was actually out of the market for more than a year before getting back into it.
We are much more comfortable on the long side and hanging around in cache until new opportunities present themselves.
Naresh: I just want to reiterate to people that tradestops.com/webinar. It’s tradestops.com/webinars, we have transcripts up there of these training sessions. We have the training session replays up there. That’s going to be the link, tradestops.com/webinars. You can go back and get all the training that you need.
Tom: Let’s maybe take one more question, and then we’ll stop the webinar so that we can process the recording and get it out to everyone.
Naresh: How about two more questions?
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Tom: Deal.
Naresh: We actually have quite a few coming in. First one, at the end of the first month of a Pure Quant portfolio, are you determined which stocks need to be replaced and what are the set symbols to replace them?
Tom: Easy. In this case, you just go, “How many stocks have been sold out?” In other words, how many stocks have you been stopped out of? If you haven’t been stopped out of any of them, there’s nothing to replace.
Let’s say that you’re stopped out of two or three, and then you’ll go through this Pure Quant process again…Let’s hit all newsletters and see what happens. In this case, we’ll look for…let’s say we’ve grown to $103,000. We want 20 positions, and we click run research. There we go.
What you’ll do is it’ll show you the stocks that you would invest in and the ones that are different from what you own will be the ones that you’ll buy and that you’ll replace with.
You could go for months at a time without replacing any stocks. The only replaced stocks after one has been stopped out or after a few have been stopped out, and then you go through the process of replacing and rebalancing.
Naresh: Last question, then we’ll wrap things up. We wanted this to be a quick session today.
Darryl is asking, “Is there a way that I can export the billionaire portfolios and Quant stop? I can export this list or this data into Microsoft Excel or some other way?”
Tom: Let’s take a look at this Pure Quant that we set up, the last portfolio that we set up. We can go over here to the far right-hand side, upward towards the top, just underneath the latest close. Click on export. There you go, done. I’ll open that up.
[pause]
Tom: All we have to do is adjust the column sizes. I know that can be done in one fell swoop. There you go. You got it done.
Naresh: Awesome. It looks like there are few more questions but we’ve just about run out of time. What we are going to do is hold another training session, actually many, many more training sessions coming up. Stay tuned to your emails.
There’s going to be a replay of this training session available later today or tonight. We’ll get that replay out to you guys. In the meantime, just get familiar with the TradeStops system.
Again, look out for your email tradestops.com/webinars. It’s where you can get all the replays. Also, you can register for future webinars there as well, so tradestops.com/webinars.
Feel free to call our customer success team or email them. Their numbers and email addresses are all included at the bottom of the emails and on our TradeStops website.
Tom can also bring up the phone number right now if you have any questions or want to speak to somebody. Tom, parting words?
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Tom: Thank you, Naresh. This is a lot of fun putting these together, looking at the different capabilities within TradeStops. We’re learning new things all the time and how you can manipulate some of the data to show things that are important to you individually as an investor.
We’ve got a great team. Naresh, thank you so much for co-hosting. We’ve got Gail, Haidee, Brian, Marina, Albert. We’ve got our whole customer success team on the ball with this.
We appreciate your membership at TradeStops and look forward to more training sessions, more webinars next week.
Thanks again, Naresh. Thanks, everyone.
Naresh: Thanks, everyone. Have a good weekend.

Transcription by CastingWords