Eric Dye couldn’t have chosen a more worthy candidate to interview than Paul Mampilly for his recent podcast. Ever since he earned his Master in Business Administration from Fordham University in 1991, Mr. Mampilly jumped right into the financial industry as an assistant portfolio manager at Bankers Trust. As his knowledge and experience increased, he was able to move on to greater challenges with ING and Deutsche Bank. He proved that he belonged amongst the best, so Kinetics Asset Management recruited him to manage its hedge fund, and its assets increased to $25 billion. For that reason, Barron’s named the fund as one of the “World’s Best.”
Helping the ultra rich become even wealthier was not enough for Paul Mampilly. He wanted average Americans to be able to join in on the prosperity, so he left his job on Well Street so that he could focus on his entrepreneurial ventures. Now that he has become a member of Banyan Hill Publishing, 90,000 people have signed up for his newsletter Profits Unlimited in which he has the opportunity of informing his readers about his latest investment opportunities.
Those antecedents brought Paul Mampilly to the attention of Eric Dye who wanted to interview him for his podcast, and they discussed what is different about the stock market today, grave errors that people make when they are making their first trades and people whom Mr. Mampilly admires.
In the interview, Mr. Mampilly explained that he has an understanding of Wall Street that the average investor doesn’t have. For example, he has been the manager of a trading desk. He has also served as an analyst. Finally, he spent time managing money, and those are actions that the average investor hasn’t been doing over the years.
Mr. Mampilly also does something on a daily basis that most people are not doing at all. He spends 12 or 14 hours a day reading about and following the stocks that his clients have purchased. He also watches the companies that he is considering investing in and keeps up to date on what is going on in the markets that can affect the prices of stocks. He has his eye on everything.
Mr. Dye wanted to know how the stock market has changed over the years, and Mr. Mampilly gave him an earful. While Mr. Mampilly was managing a $5 billion hedge fund, he began to notice that people were no longer doing the actual trading. Computers that used algorithms and trading robots started to do the trading. That meant that large investment banks could use the information they collected against average traders, and it is the largest change that Mr. Mampilly has witnessed over the years. Now, all investors are using the same investment tools, and it is creating a completely different atmosphere that puts average and do-it-yourself investors at a disadvantage.
The other change that Mr. Mampilly has noticed is the use of “Exchange Traded Funds” or ETFs. Mutual funds were the dominant force 20 years ago. Today, ETFs are at the forefront.
Before ETFs, it was easier to determine which stocks star managers were going to buy by learning their individual habits. Then, you could try to purchase the stock before they did. Since ETFs may have more than 100 securities, it is harder for an investor to pick one security and buy before the crowd has a chance to do so. Making money in the stock market today is much more difficult because of it.
Today, Mr. Mampilly is witnessing speculators make investments even though the companies are not earning any money at the moment. One of the biggest changes is the mindset that growth can be pursued now and profits may come later. That’s different from 20 years ago when you were not a valued company if you were not earning profits at the moment.
Since it is important for Mr. Mampilly to help average investors choose the right products to gain the highest profits, he also wants to help them preserve their wealth. As a way of doing this, he has identified the biggest mistake that new investors make, and it is putting all of their money into one stock. He explained that this causes people to lose large sums of money if they guess wrong.
Another mistake that Mr. Mampilly identified is that people invest too much money into their stock positions. This occurs even when people have more than one stock. Rather than spread the money out evenly, they will choose one stock and place a majority of the money in that one. As a result, the same thing happens that happens in the above-mentioned scenario.
People also tend to buy when they are feeling good, but Mr. Mampilly has found that this is not the right time to do so. The best time to buy is actually when things are difficult in the stock market because that is when prices are at their lowest.
When asked who he admired in the business world, Mr. Mampilly said that he likes what he is seeing from Elon Musk. He is impressed with the fact that Elon Musk started Tesla when there wasn’t a market for electric cars. He also applauds the fact that Elon Musk remained steadfast in his idea when he had so many people telling him that the electric car was a bad idea. It also impressed him that Elon Musk was willing to invest more of his own money when Tesla was facing bankruptcy.
Paul Mampilly showed everyone his prowess in investing when he was invited to participate in a notable investment competition that the Templeton Foundation runs. He started this competition with $50 million, and by the time he was finished, the original $50 million had increased to $88 million. This would be impressive on its own, but Mr. Mampilly made this happen during the financial crisis of 2008 and 2009.
Along with the newsletter Profits Unlimited, Mr. Mampilly also writes a newsletter by the name of “Extreme Fortunes,” and both are highly popular today. He also introduced a research service last year and called it “True Momentum.”
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