Ian Wyatt | SmallCapInvestor Daily | November 30, 2010 12:19pm EST
After this past Sunday night I believe there is potential for a sustained and real economic recovery in the United States.I say this because on Sunday, I was fortunate enough to catch a re-run of the first episode of 'Sarah Palin's Alaska', a reality show featuring the notorious Tea Party advocate, prior Alaskan governor, and 2008 vice-presidential candidate doing what she apparently loves to do - travel around Alaska in a float plane to do outdoor activities with her family.
On November 15, 'Sarah Palin's Alaska', debuted on TLC to a network record 5 million viewers.
Why did my experience with this horror of a reality show make me feel that Americans are on the right track?
Because after watching the show I did a little research - and learned that in the second episode, which aired on November 22, the audience fell by nearly 40 percent, to just around 3 million viewers.
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I should point out that my feelings about Sarah Palin's new television show, or really any feelings I have about Sarah Palin in general, have nothing to do with my ability as an analyst. So you shouldn’t care what I think about Sarah Palin. But you should care about my ability to pick up on trends and draw valuable conclusions from them. And this brings me to my point.
***The data show that Americans are increasingly turning their attention away from time consuming and attention dilutive activities, like Sarah Palin's Alaska, to focus on more productive activities. If they can continue to stop diluting focus, and start doing the things that really matter, we can re-build America into a great country.
For another data point, consider that U.S. worker productivity growth has averaged 3.4 percent on an annualized basis since the recession ended in June of 2009. Productivity is almost as high as it was after the dot-com era recession in 2001-2003, after which the U.S. enjoyed years of positive growth.
For my part I turned the show off and I began stock research for a busy week of work after a long holiday weekend.
***During Sarah Palin's brief visit to my living room I was reminded of the basic investing lessons that small cap investors must keep on their radar at all times.
These lessons boil down to one key phrase - "Focus on the stuff that gets stuff done."
That's pretty basic, but it pretty much covers everything important. Especially since self-directed investors are constantly pulled every which way by the massive amounts of content that is published in both digital and paper media these days.
All of these opinions, stories, and marketing efforts dilute the self-directed investor's focus from doing the stuff that gets stuff done - and fills their minds with a ton of garbage that doesn't really matter.
So what 'gets' stuff done for the small cap investor?
Look for great growth companies in strong industries, do fundamental research to identify stocks that are undervalued, and monitor your positions to ensure they are still the right ones to own.
It's literally that simple. Everything else is secondary.
Of course it's also important to consider macro trends in order to keep your investments in perspective, but at the end of the day you need to buy shares in individual companies. And that means focusing on finding the right ones.
Nothing else is nearly as important.
To help you keep your focus, I've put together a very brief list of the four things that matter most when you're doing your stock research. Consider these the four lessons that Sarah Palin reinforced for me this past Sunday when she was diluting my focus.
Stay focused on these four lessons and you'll see far better investing results.
1. Those companies that grow revenues and earnings over time typically see their share prices increase as well. These are the stocks that you want to own.
2. Stock prices move based upon past financial results and on expectations for future financial performance.
3. To help predict future performance, study a company's past financial results because historical performance can help to predict future results.
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4. Buying growth at a reasonable price often yields outperforming stock investments. If you do the above three steps, you'll have a much better idea of what a reasonable price is.
Doing the above has helped me and Tyler Laundon, lead research analyst at Wyatt Investment Research's Small Cap Investor PRO to recommend stocks that have gone up an average of 33.7 percent since May. We're not trying to make it too complicated, or trying to perfectly time every investment. We're just focused on finding companies that are growing revenues and earnings, and are selling at a discount to their fair value. You can do the same thing.
Further Reading: The Biggest Gains ALWAYS Come from Small Cap Stocks: Here you can learn more about the strategy that Tyler and I use to find small cap stocks, like two that we are up 81 percent and .....read more on small cap investor
