Test drive your stock ideas! What can you learn from this NASCAR driver’s unexpected racing maneuver? [Wednesday: The Independent Investor]
Miles Everson’s The Business Builder Daily speaks to the heart of what great marketers, business leaders, and other professionals need to succeed in advertising, communications, managing their investments, career strategy, and more.
A Note from Miles Everson:
Happy midweek and welcome to today’s edition of “The Independent Investor!”
We hope you’re having a great week so far.
Every Wednesday, we publish articles about basic investing tips. Our goal is to help you strategically think about your financial decision-making and achieve true wealth in the long run.
Today, let’s focus on a coaching comment my friend and colleague, Professor Joel Litman, delivered to his workforce at Valens Research.
Keep reading to know how something as simple as a kid’s gaming system can give you useful and insightful investing advice.
Miles Everson
CEO, MBO Partners
Chairman of the Advisory Board, The I Institute
The Independent Investor
Calling all National Association for Stock Car Auto Racing (NASCAR) fans!
Have you heard about one of the race’s highlights that made national headlines in the U.S. in November 2022?
Clue: It has something to do with Ross Chastain, the American professional stock car racing driver of the #1 Chevrolet Camaro ZL1 for Trackhouse Racing.
Any ideas?
For those of you who haven’t heard about the news, allow us to briefly talk about it in today’s article…
Photo from USA Today
During the NASCAR Cup in November 2022, Chastain was sitting in 10th place at the final race. To leap up the standings and snag a qualifying spot, he needed to get through 6 competitors ahead of him.
In the final seconds of the race, Chastain found it hard to weave through other cars. The odds were against him. So, what he did next was unexpected:
Chastain accelerated against the wall that circled the track and basically “let go of the wheel!” Smoke and sparks flew as his car scraped against the barrier, guiding him past the competition at record speed.
The result of that?
He went from 10th place to 4th place in a matter of seconds! This made national headlines AND caught the attention of NASCAR enthusiasts worldwide.
No one had ever tried a move like that in real life. According to Chastain, who went on to 3rd place in that championship, he got the idea from playing NASCAR 2005 on his Nintendo GameCube as a kid.
Investing Advice from a Gaming System
Did you know Chastain’s idea from playing on his Nintendo GameCube can teach you an important insight about investing?
Think about it: His video game maneuver was unheard of in the racing world… but since he knew how to bring that idea to life, he was able to use it to his advantage.
Besides, virtual driving practice is becoming increasingly commonplace nowadays. Sure, most professional drivers don’t dust off their Nintendo consoles for a warm-up, but some of them are starting to rely on computer-driven simulations of real-world racing situations.
In fact, these programs are getting more and more realistic, down to details like real-life ads on the walls. Such software allows up-and-coming race car drivers to practice their skills without ever setting foot on an actual racetrack.
These kinds of technologies aren’t for NASCAR drivers only. In recent years, movie producers have used driving simulator BeamNG.drive to test scripted car scenes before replicating them in real life.
So, how do these concepts apply to investing?
According to Professor Joel Litman, Chairman and CEO of Valens Research and Chief Investment Strategist of Altimetry Financial Research, new technology also allows investors to take stock ideas for a “test drive” in the investing world.
Tools like Trefis can help investors visualize a company’s key performance metrics… and chatbots like ChatGPT can provide different perspectives on several industry trends.
Investors can even invest now based on the stars with Bull & Moon—a website developed to help people match stocks to their astrological signs!
Take note, however: Professor Litman and his team don’t recommend letting astrology determine one’s portfolio composition. The point here is that many of these technology-based insights can help hone investors’ stock-picking skills, which include:
- Pulling company data from multiple sources
- Analyzing earnings calls for management opinions
- Reading between the lines on financial statements
These are the kinds of research Professor Litman and his team do at Altimetry to find market-beating stocks.
The Perks of Using New Technologies in Investing
Professor Litman says new innovative investment tools are emerging every day… and they’re changing the economy at a faster rate!
Recently, he and his team have been playing with a new AI tool called Hila.ai. This tool works similar to ChatGPT, except that Hila has the ability to compile U.S. Securities and Exchange Commission (SEC) filings and earnings call transcripts.
One time, Professor Litman used Hila to upload a Yale professor’s 100-plus-page financial research paper about the Russian invasion of Ukraine. The paper discussed how the resulting economic sanctions have hurt many companies.
Professor Litman didn’t have the time to read the entire research paper. So, he uploaded it into Hila and asked for a summary of the analysis. The interesting part about that?
Aside from a summary, the AI tool allowed him to search the companies mentioned in the paper AND see how those firms discussed the impact of the Russian invasion on their performance.
Hila is a free AI tool… for now. So, while that is the case, we recommend you to give it a try! You’ll be amazed at how this AI tool can help improve your attention to details as an investor.
The bottom line?
Keep an eye on emerging technologies with applications in the investing world. They have the power to completely change your perspective on companies and entire trends.
We hope you gained interesting and useful insights from today’s topic!
Stay tuned for next week’s “The Independent Investor!”
(This article is from The Business Builder Daily, a newsletter by The I Institute in collaboration with MBO Partners.)
About The Dynamic Marketing Communiqué’s
“Wednesdays: The Independent Investor”
To best understand a firm, it makes sense to know its underlying earning power.
In two of the greatest books ever written on investing, the “Intelligent Investor” by Benjamin Graham and “Security Analysis” by David Dodd and Benjamin Graham (yes, Graham authored both of these books), the term “earning power” is mentioned hundreds of times.
LITERALLY.
Despite that, it’s surprising how earning power is mentioned seldomly in literature on business strategy. If the goal of a business is wealth creation, then the performance metrics must include the earning power concept.
Every Wednesday, we’ll publish investing tips and insights in accordance with the practices of some of the world’s greatest investors.
We make certain that these articles help you identify and separate the best companies from the worst, and develop your investing prowess in the long run.
Our goal?
To help you get on that path towards the greatest value creation in investing.
Hope you’ve found this week’s insights interesting and helpful.
Stay tuned for next Wednesday’s “The Independent Investor!”
Cheers,
Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
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