How to Be Richer, Thinner and Happier... In Five Easy Steps

Alexander Green
by Alexander Green, Chief Investment Strategist, The Oxford Club

Editor’s Note: We usually stick strictly to financial guidance here at Investment U, leaving advice on diet and nutrition to others. But Alex is one of those rare individuals who has succeeded in both wealth and fitness. And what he’s discovered is that the same basic principles apply to each. In a special four-part series starting today, Alex will share his secrets to getting rich... and getting thin.

- Andrew Snyder


The American socialite Wallis Simpson famously said you can never be too rich or too thin. And over the last 18 months, I’ve discovered that the same principles that create wealth can be used to create a leaner, healthier physique.

So if you’re one of the tens of millions of Americans who would like to be richer or thinner - or both - listen up. Over the course of the next four columns, I’m going to reveal the unvarnished truth - completely free from any gimmicks or exaggerated claims - that will guarantee you both a fatter portfolio and a thinner body. All it takes is a battle-tested, easy-to-understand system that really works. And I’m about to reveal it right here...

Whenever I speak at investment conferences, I try to emphasize that investment success is not about following the right predictions. It’s about following the right principles.

This is true in virtually every aspect of life. Imagine a tunnel, bridge, or skyscraper erected without using proven designs, building materials or construction methods. The results would be calamitous.

A composer is free to create beautiful music, but only within the boundaries of harmony, melody and rhythm. (Few can bear to listen to a so-called “atonal masterpiece.”)

If you are a golfer, you have to use the proper stance and grip to strike the ball correctly. You have to keep your head still, your front arm straight, and your back elbow tucked in. You won’t become a champion by reinventing the golf swing. Players were whacking balls around St. Andrews before Columbus discovered America.

Principles are the collective wisdom of our species. They show us what is valuable. They warn us about what is not. Principles of law safeguard society and protect our rights. Scientific principles further technology and explain the natural world. Spiritual principles guide our lives. Or should.

The same is true of health and money. Well-established financial principles tell us how to save, invest and create a fortune. Health principles guide us on nutrition, exercise and the prevention of disease. Short cuts in either field do not lead to long-term success.

I learned this the hard way. When I took my first job as a stockbroker almost three decades ago, I dreamed of making a quick killing in the market. Yet I was the one who got killed. I fooled around with risky options, penny stocks and all sorts of market-timing strategies that delivered nothing but tax deductions. At one point as a young man I lost my entire net worth on a single trade. Of course, my net worth was only $15,000 at the time. But when that’s all you have, it stings.

Seeking Guidance

In frustration (and poverty), I finally turned to the great investors of the day: Warren Buffett, John Templeton and Peter Lynch. I studied everything they wrote, listened to all their speeches and tried to soak up as much knowledge as I could. From Buffett, I learned about value. From Lynch, I learned about growth. From Templeton, I learned how and why to search worldwide for investment opportunities.

As time went by, I also gained important knowledge about asset allocation from William Bernstein, about stock selection from William O’Neil, the publisher of Investor’s Business Daily, and about trailing stops from Dr. Van Tharp.

After many years and much trial and error, I blended them all to develop a system that leads - almost inevitably - to financial success. Don’t take my word for it. The independent Hulbert Financial Digest has ranked The Oxford Communiqué, whose portfolio I direct, among the handful of top-performing investment letters in the nation for more than a decade now.

The Oxford system is built on a rock-solid foundation of asset allocation, diversification, security analysis, position sizing and trailing stops. And it works. We’ve received hundreds of testimonials from Oxford Club Members who tell us they finally understand how to invest... and are getting seriously richer.

But how about getting thinner? That’s another story. And as you’ll see tomorrow, it dovetails nicely with the first one.

Until then, good investing,

Alex

Part 2

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This Stock Just Went on Sale

It’s been a rough back-to-school season for many retailers.

But that just makes it a nice time to find some great companies trading at a discount.

Take TJX Companies (NYSE: TJX), for instance.

The retailer, known for its T.J. Maxx and Marshalls stores, is down about 6% since reaching a new high on Aug. 6.

But Alex recently told us he believes the company will surprise when it reports its earnings tomorrow.

Here’s what he said:

“With more than 1,000 stores around the world, TJX is the nation’s largest off-price retailer of apparel and home fashions, sold through T.J. Maxx, Marshalls, Winners, HomeSense, HomeGoods and T.K. Maxx.

“The company’s business model is straightforward. It buys up excess merchandise from department store chains and other retailers and offers them to customers at deep discounts to the sticker price. It carries leading brands like Ralph Lauren, Perry Ellis, Calvin Klein, Greg Norman, Tommy Bahama and Levi’s. Much of this merchandise is marked down 50% or more.

“The company’s specialty is high-quality, in-season, name-brand fashion apparel and accessories. And in this economy, millions of consumers are giving up Saks and Macy’s for T.J. Maxx and Marshalls.

“Sales topped $26.2 billion over the last 12 months. The company enjoys double-digit operating margins. And management is earning the kind of return on equity that Microsoft did during its heyday in the ’80s and ’90s: 55%. That’s huge.

“Earlier this spring, CEO Carol Meyrowitz said what we’ve been saying for over a year: The global opportunities facing TJX are ‘nothing short of staggering.’

“Management doesn’t get much blunter - or much more optimistic - than this. TJX is expanding internationally. It is attracting more young people, the key retail demographic. And it is finally, belatedly getting into e-commerce with the purchase of SierraTradingPost.com. (For years, it was afraid it would cannibalize its brick-and-mortar stores.)

“TJX is capitalizing on canceled orders to other retailers and mall vacancies in a soft economy. And consumers - newly cautious since the heady days of the real estate bubble - continue to shop smarter.

“Our shares are up over 30% and recently a new 52-week high. But expect more good news when TJX announces results for the June quarter on Aug. 20.”

- Justin Dove with Alexander Green

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