You don’t need to live in New York or know the right people…

And you don’t need millions of dollars…

[ad#Google Adsense 336×280-IA]Thanks to the U.S. government (yes, really), you can align your portfolio with those of the world’s best investors for free.

One of my goals is to pass along insights, strategies, and actionable ideas from top investors and traders.

These elite money managers have decades of experience, huge research budgets, the best contacts, and long track records of success.

We’d be fools not to “look over their shoulders” for investment ideas…

Elite investors who manage at least $100 million are required to file forms (called “13Fs”) with the U.S. Securities and Exchange Commission every three months. These forms detail which stocks they’ve bought and sold from one quarter to the next… and which stocks they held at the end of the last quarter.

The latest round of 13Fs – for the quarter ending June 30, 2016 – came a few weeks ago. And an important theme ran throughout the filings. Most folks probably didn’t pick up on it. But this theme can help guide your trading and investing in the coming months…

The theme: The world’s best traders are continuing to trade. They’re placing lots of bets that stocks will rise… and some bets that stocks will fall. But many of the world’s best investors – folks known for buying and holding for years or decades – are not buying. For the most part, they’re either holding on to what they already own… or they’re selling.

Let’s look at a few examples…

Donald Yacktman is one of the world’s best crisis investors. During the tech bubble of the early 2000s and the financial crisis of 2008, Yacktman far outperformed the market, most of his peers, and just about everyone else…

From the end of 1998 through the end of 2002, he generated a 26% return. The S&P 500 fell 25% during those four years. In 2008-2009, Yacktman generated a two-year, 18% return for investors while the S&P 500 dropped 20%.

Back in February, Yacktman sold shares in all of his biggest positions. That trend continued last quarter. He sold more than 14% of the shares in five of his top positions… and he added (less than 1%) to just two.

Next, I won’t give a full bio of superinvestor Warren Buffett. If you had invested $10,000 in Buffett’s holding company, Berkshire Hathaway, in 1964, it would be worth more than $150 million today. He has compounded investment capital at an average annual rate of about 21% for half a century… And it has made him one of the world’s richest people.

Buffett hasn’t made a significant purchase for a year. In 2016, only two buys – a new position in consumer-electronics giant Apple (AAPL) and an addition to his position in energy firm Phillips 66 (PSX) – represented a change to his portfolio of about 1%. That’s it.

Buffett famously said, “You want to be greedy when others are fearful. You want to be fearful when others are greedy.” He’s not being greedy right now. And neither is his Canadian counterpart…

Like Buffett, Prem Watsa is one of the world’s leading value investors. He also uses his insurance company’s “float” – premiums that haven’t been paid out in claims – to buy stocks.

Over the 25 years ending in 2014, his returns outpaced the benchmark S&P 500 Index by 7.3 percentage points a year. Watsa’s returns were 16.9% annually, compared with the S&P 500’s returns of 9.6% annually. That’s the difference between making nine times your money and 49 times your money.

Watsa was one of the few investors to outperform Yacktman during the last two busts. From the end of 1998 through the end of 2002, he generated a 41% return (compared with the S&P 500’s 25% drop). In 2007-2009, Watsa generated a three-year, 43% return for investors while the S&P 500 dropped 16%.

Watsa also hasn’t made any major new investments over the past year. Instead, he has steadily reduced his exposure to stocks over the past few years.

Now, all that said, many of the world’s best traders still have large positions in stocks. If the market crashes now, they would likely get hit hard. I’m not saying it’s time to panic and sell all of your stocks.

History shows that stocks nearly always continue higher in the 12 months after the S&P 500 hits a new all-time high (after going at least a year without hitting one). That just happened in July, and stocks have continued higher. So I still suggest trading with a bullish bias.

The important lesson we’ll take away from the latest round of 13Fs is that now isn’t a good time to put money into new long-term stock investments. There will be some exceptions… But if you’re considering taking a large position in a business you hope to hold for many years, chances are you’ll have a better opportunity down the road.

Set some extra cash aside. Buy gold and silver. And continue to trade with a shorter time frame in mind. That typically means using smaller position sizes and tighter stop losses.

The opportunity to “go big” in stocks will likely come when others are fearful… and when guys like Yacktman, Buffett, and Watsa are buying. Now is not that time.

Good trading,

Ben Morris

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Source: Growth Stock Wire