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3,000-Year-Old Story Reveals the Secret to Stock Market Fortunes

3,000-Year-Old Story Reveals the Secret to Stock Market Fortunes

They had just finished the pitch.

They needed their multibillion-dollar “competitor” to buy their company.

If not, they didn’t have enough cash to keep the lights on. This deal had to happen.

“How much you looking for?”

Marc Randolph replied: “$50 million.”

The CEO was trying his hardest not to laugh.

Marc and his partner Reed Hastings left the room without a deal in 2000. It was now sink-or-swim time.

On the way back to their office, Marc and Reed were more determined than ever to slay Goliath.

Marc and Reed, two modern-day “Davids,” knew that the internet was the future.

Given the chance to buy Netflix for 1/2,600 of what it is worth today, Blockbuster said no.

Less than one decade later, it was Netflix that had the last laugh. Blockbuster filed for bankruptcy in 2010, and Netflix went on to dominate the streaming business.

Underdogs Offer Investors Huge Upside

I love a good underdog story. The stock market is filled with them.

Wall Street loves to park its money in the big, established companies. I call these behemoths “Goliaths.”

They may be large and intimidating. But they’re also slow and lumbering.

Just look at Blockbuster, the video rental Goliath that dominated the late ‘90s and early 2000s.

Everyone thought that Blockbuster was too big to fail.

But Blockbuster was stuck in the old way of doing things. And it failed to see that the future of video rentals was going online.

Then no-name Netflix, Inc. came along and knocked Blockbuster off its pedestal — just like David, a tiny shepherd boy, defeated Goliath in the Bible.

That’s why I put my money on the Davids of the stock market.

Because while everyone else sees weakness in these companies — I see their “disadvantages” for what they really are: secret weapons.

Netflix used its small size to stay nimble and adapt to new technology, like online streaming.

It also didn’t have to spend capital on brick-and-mortar stores like Blockbuster did. But back then, Wall Street saw this as a disadvantage. Instead, it was Netflix’s secret weapon.

In fact, those capital expenditures are what ended up killing Blockbuster.

Today, Netflix is a $150 billion company while Blockbuster — which once owned over 9,000 stores globally — now only has one store left open in Bend, Oregon.

Of course, not every small company is a David. Just like not every big company is a Goliath.

But if you can figure out who’s who in the stock market … you’ll multiply your money in a big way.

So, in today’s video, I share with you my approach to how I find David-like stocks that can make you serious money.

Lessons in Investing From Super Bowl III

 

What underdog investment lessons can we learn from football? Plenty.

January 12, 1969 … Super Bowl III, one of the greatest Super Bowls of all time. This is the scene of one of the best underdog lessons we can use to help us become better investors — a lesson as universal as David and Goliath.

And there’s a lot to learn from this Super Bowl game that’ll change how you invest, so hear me out and stay with me.

The Underdog Story of Super Bowl III: Jets vs. Colts

This was the first time that a team from the NFL (National Football League) was taking on a team from the newer AFL (American Football League).

The Baltimore Colts were the old NFL, going up against the New York Jets, who represented the AFL.

Now, the talk was that the AFL was inferior to the NFL.

Teams and players in the AFL weren’t even considered to be of the same caliber as those in the NFL. In fact, the NFL looked down on the AFL.

The AFL was our David, while the NFL was our Goliath.

But three days before the Super Bowl, Jets’ quarterback, Joe Namath, made a bold prediction. He said: “We’re going to win this game. I guarantee it.” [1]

At the time, sportswriters, fans and odds makers weren’t confident in a Jets victory at all. Like they did when David when up against Goliath, everyone thought the Jets had absolutely no chance of taking down the Colts.

By game time, the Jets were 18-point underdogs.

Now, let me just tell you what that means … If you bet on the Colts, the Colts would have to win by 18 points for you to get paid.

The Jets were very insulted and angry at being such big underdogs. In fact, by making them such heavy underdogs, the odds makers actually emboldened and galvanized the team. Their honor was at stake, and there was no way this team was going to lose.

Some Underdogs Are Just Not Underdogs at All

Now, New York fans who watched Namath and the Jets play all season long knew that the Jets weren’t underdogs at all.

They had a bite.

In fact, everything was lining up for a Jets win.

Most sports writers wrote about the Colts’ experienced players, and how they would serve them well against the Jets’ younger, less experienced players.

The Colts were pros who could walk the walk, talk the talk and outplay the inferior Jets.

Here’s the thing…

The Colts’ older group of defensive line players did have a lot more experience. In fact, they had 10 years’ more experience than the Jets.

But they were no match for the Jets’ younger and bigger offensive line.

The Jets’ bigger offensive line would give Joe Namath all the time he needed to pass to his receivers. In fact, the Colts were so confident of victory, they didn’t even bother to modify their defense against the Jets’ passing game.

Goliath’s arrogance was part of his downfall.

The Underdog Bites Back

When the Super Bowl started, the Jets were the first to score, and were up 7-0 by halftime.

The Colts finally did score a touchdown in the last minutes of the game, but it was too little, too late. The Jets defeated the Colts by a score of 16-7.

This game is considered one of the greatest upsets in both football and sports history.

Underdog Investment Strategies Are in the Details

Now, you might be asking, “Charles, why the heck did you tell me about a Super Bowl that happened over 50 years ago, and how does it apply to me making money?”

Well, think about this for a second…

You could really learn a lot about investing from just watching how this game played out. Because in a nutshell, that’s what all investing’s all about.

It’s trying to find the 18-point underdogs that really should be the favorites.

In other words, you want to look for mispriced bets, because prices get out of whack in the stock market due to short-term emotions.

Stock prices plunge 20%, 30%…

If you just look at the 52-week high and low on most companies, you’ll see a spread of 100% between them. The high could be 50, and the low could be 25.

Such a change in one year?

Yes. Why? That’s due to a lot of short-term emotion, and that’s really where prices get out of whack.

In other words, it’s really the battle of David and Goliath.

You see, David is smaller and nimbler, which are actually his advantages over the slower giant, Goliath. David uses his simple slingshot, knocks Goliath to the ground and cuts off his head.

The David and Goliath Lesson

Now, the trick in investing is to find the David stocks that are up against Goliath companies.

In other words, you want to look for companies that everyone else thinks are underdogs … but have huge structural advantages.

Because when you find these kinds of underdog stocks, you can get them at bargain prices, and you can multiply your money in a big and quick way.

If you’re interested in learning how to spot underdog companies, click here for more details on how to subscribe to Alpha Investor Report.

Regards,

Charles Mizrahi

Editor, Alpha Investor Report

P.S. Check out my YouTube channel and click on the subscribe button. That way, you won’t miss any of the content I post on how to make money in the stock market and how to be a better investor.

Sources:

[1]: Joe Namath made the guarantee before Super Bowl III, but he wasn’t only Jet predicting a win

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