Opportunity is in the eye of the beholder

Submitted by Greg Fossedal on Tue, 05/24/2011 - 11:27am

It's a commonplace that many of the best teams in football -- the Steelers, the Patriots, and the 13-time NFL Champion Green Bay Packers -- get built through the draft and, related, are skilled at picking up low-level free agents... not the big-name stars of today, but the potential role players or even stars of tomorrow.  

There are many reasons these teams have won six of the last 11 Lombardi Trophies. But a principal one is their intelligent, studied opportunism.  

One key to portfolio management is to maintain the same kind of radar -- a sensitive early warning system -- that's constantly alert to new trends, new companies, new combinations of the two...  and on both the long and short side.  Technology drives new ways to deliver movies; Netflix (NFLX) seizes on it: Blockbuster doesn't or can't; up goes Netflix, down goes Blockbuster.
 
For the aforementioned football teams, the alertness to player opportunities includes doing things like watching a guy's YouTube video even if he didn't perform well at the NFL's "testing combine," or sending out one of the assistant coaches to conduct a private workout -- as the Packers did with a 6th round-draft choice this year, a player who led the Pac 10 in quarterback sacks the last two seasons.  
 
For the investor, it might mean you start paying attention to a company that only has five stores -- but you notice the one near you is always crowded, and really integrating with its customers.  
 
Just yesterday, I saw a news story about a company's claim it has developed an advance indicator, based on Twitter postings, that has proven to have significant predictive value.  Okay, this one is probably a fad -- or will be, even if it's working now, once people notice they can move the market with their Tweets.  
 
The point is, you don't have to capture every trend, or be the first person in your Facebook circle to buy a Pet Rock, to be successful.  You just have to keep an ear cocked, an eye open and active, maybe even a nostril that makes a keen sniff now and then.
 
At Damon Vickers & Co., of course, we're doing that all the time, whether it's taking a closer look at Chipotle Mexican Grill (CMG), as we will in a forthcoming video report, or watching for forthcoming technological improvements in 3-d television.  Find a trend? We look for companies that can ride it, indeed lead it.  Find an interesting company? We try to figure out if it will benefit from any social or economic trends.
 
The old Wall Street saw says that bulls make money, bears make money, and pigs don't.  But chickens (who peck about for food) and tigers (who wait for the right prey) make money too.  Every type of animal on the planet eats -- but the ones with their eyes closed may not.
 
Ownership disclosure: At the time this product was published or posted, Damon Vickers & Co. and Nine Points Capital Partners owned shares of Netflix (NFLX) and Chipotle Mexican Grill (CMG).  
 
Investing in securities and the financial markets involves risks, such as currency fluctuation, political risk, economic changes and market risks. As with all investments, an investor should carefully consider his investment objectives and risk tolerance as well as any fees and/or expenses associated with such an investment before investing. Investing in financial markets and their publicly issued securities may not be suitable for all investors.