The Rude Awakening
Gaithersburg, Maryland
Friday, August 11, 2006 ------------------------- - How you can invest like England's Peter Lynch,
- "Don't hold the markets," if you want to ensure you
beat them,
- Your own investment strategy, a special situation to
plunder, what the markets are doing themselves and
more...
------------------------- [Joel's Note: In today's issue, Rude favorite, Chris Mayer,
introduces you to a man they call, "the Peter Lynch of
Britain." Chris unravels the master's strategy and lays out
a few simple rules you can follow to both protect and grow
your portfolio. True, it does take conviction and
determination, but the rewards are great. Of course, if you were to follow the great Dr.
Richebacher's strategy for the year, you may consider more
closely what NOT to buy rather than what TO buy. The last
classical economist warns against stocks and bonds and, as
for housing...forget about it! In fact, the good Doctor is
expecting an implode that will catch millions off guard. Before we get into today's Rude, you may wish to take a
minute to read over Dr. Richebacher's grim forecast and the
only five investments he believes you should own over the
coming twelve months. Enjoy: Investing While the Empire Crumbles
http://www.isecureonline.com/Reports/RCH/ERCHG828 --- Investment Alert ---
Why Buy a Silver ETF When You Could Make 400% in Just 34 Days! And that was just one run of a "sterling" options double play
that saw an additional 67% gain in only 15 days. Join this Maniac's rampage and YOU could rake in even more than
this - and faster - as the commodities bull really begins to heat
up! So far in 2006, the Maniac Trader's 11 for 11 - let him go to bat
for you today http://www.isecureonline.com/Reports/RTA/ERTAG813 ---------------------------- The Peter Lynch of Britain
By Christopher Mayer There's a very successful investor in England you've
probably never heard of. Yet he's produced a 20% compound
annual return for more than a quarter of a century,
managing one of the largest mutual funds in the United
Kingdom. His sustained record of excellence earns him a
number of superlatives, as well as the sobriquet "the Peter
Lynch of Britain." I'm a sucker for books exploring the careers and
experiences of great investors. Moreover, I have come to
believe that there are core elements to successful long-
term investing – elements that run through all of these
stories of great investors. With these thoughts in mind, I
recently picked up a book by Jonathan Davis entitled,
Investing With Anthony Bolton: The Anatomy of a Stock
Market Phenomenon. Bolton runs the Fidelity Special Situations Fund (U.K.). He
works in the heart of London in an office block overlooking
St. Paul's Cathedral. His guiding philosophy: "If you want
to outperform other people, you have got to hold something
different from other people. If you want to outperform the
market, as everyone expects you to do, the one thing you
mustn't hold is the market itself." In other words, the successful investor does not fear
straying from the herd. In fact, he relishes "turning over
stones" in search of overlooked opportunities. Bolton also
advocates a long-term perspective. Don't do a lot of
"dealing" — or trading — as he says. Give your ideas time
to work out. Think long term, meaning years, not months. Like most successful investors, Bolton suffered a few set-
backs along the way. He invested in companies, for example,
that ultimately went bankrupt. Then there were those times
when his portfolio as a whole turned in a lackluster
performance. In 1990, Bolton's fund lost 28.8% of its value
for the year. He followed that with a paltry 3% return in
1991. That's a two-year stretch when investors didn't make
any money following one of the greatest investors of our
time. And despite this period – and others – in which
Bolton trailed the market, or lost money, his overall track
record puts him in the Hall of Fame. "Investment is an odds game," Bolton explains, "No one gets
it right all the time; we are all trying to make fewer
mistakes than our competitors. In fact, the key to this
business is as much to avoid losers as it is to pick
winners. On the other hand, running money with a style that
is so defensive that it avoids all losers is also, I
believe, counterproductive to superior returns." 
Bolton has the ability to "shrug off the occasional
failure…confident that the gains will on average outnumber
the duds." Investing takes some balance of courage. You
can't believe every flesh wound is mortal. Part of
successful investing is an ability to stick to your
discipline, even during stretches when it appears not to be
working well. Bolton, as with many great investors, does
not switch horses mid-race. That doesn't mean he is sure of everything he is doing. And
this is an interesting psychological part of investing that
you don't hear all that much about. "Conviction waxes and
wanes," Bolton writes, "and a lot of the time, you're
uncertain about everything." When conviction is high, then
you make big bets. When conviction is low, you should sit
on the sidelines or invest smaller amounts. One misconception people have about the great investors is
that they are always sure of what they are doing. "Some
seem to think people like myself are hugely sure of what
they are doing all the time," he says. "But this business
is not like that. You are in a constant state of
questioning your convictions." Bolton also does not spend much time on macro forecasting.
He instead works to understand individual companies. This
is where you can build an edge. He invokes fellow Briton
Jim Slater's Zulu Principle — "If you are expert on
something, however small it may be in the broader context
of things, you have an advantage over other people." Bolton also focuses on balance sheets – a snapshot of a
company's financial strength. "One vital lesson I have
learned," Bolton writes, "is that when things go wrong, the
companies I lost the most money on were those with weak
balance sheets." In addition to balance sheets, Bolton
focuses on cash flow. "The ability to generate cash is a
very attractive attribute," Bolton says. "In fact, the most
favorable of all attributes." Bolton's core investment principals reinforce the lessons I
learned during a decade of banking. A strong balance sheet
and copious cash flow do not guarantee investment success,
but they certainly reduce the odds of failure. [Joel's Note: A few months back, Chris identified a special
situation of his own that he believes is a profit
playground for forward-thinking investors. Clue: it is the
most valuable substance on earth, yet no price can be
affixed to it; it exists in abundance, yet we are fast
running out...grab your stake and learn all about investing
in the most exciting resource of all with Mayer's Special
Situations report right here: The Lifeblood Investment
http://www.isecureonline.com/Reports/MSS/EMSSG761 --- Special --- Act Fast -- Before This Tech-Industry Pawn Topples an
Automotive King And you could see 20-fold returns overnight…if you get in
on this one 60-cent stock TODAY. Find out how this innovative tech company's "Bobby Fischer"
strategy could score you grandmaster-sized 2,000% gains! http://www.isecureonline.com/Reports/VPI/EVPIG846 ---------------------------- [Joel's Endnote: Whether it is pouring over a company's
fundamentals or understanding the macro case for the sector
as a whole, everybody takes a different approach to
investing. We here at Rude H.Q. are interested in your
tried and true secrets to beating the market. Do you rely
on psychology? Employ a contrarian disposition? Analyse the
charts down to the dot? None of the above? Whatever it is that is keeping you in, and hopefully ahead
of, the game we'd like to hear about it. Send your market-
stomping stratagems to your antipodean editor here at
aussiejoel@the-rude-awakening.com and we'll see you on the
weekend. Cheers, jOEL ---------------------------- 
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