Follow the leader, lead the market

In a previous post I made the point about the need to follow inside investors who can influence your investment decision making process.

However, if you try to make investment decisions based on the say-so of one of these insiders you may very well be late to the game. Let me explain…

Of course, inside investors may make all sort of statements. But let’s focus on the types of statements that might lead you to make an investment decision (e.g. they issue a buy/sell recommendation for a stock, or offer some sort of market speculation backed up by data).

The problem with this is that the insider has already done their analysis and thinking regarding the investment, and in all likelihood have already decided on the play they will make (or will have already made). You, on the other hand, are only at the very beginning of the process.

This is not necessarily a bad position to be in. After all, this is one of the reasons you are following good inside investors… to learn about fruitful opportunities that you can investigate further.

But the real gem that many followers are missing is the influence part of this equation. That is, if you follow an insider long enough, some of their investing mindset will begin to rub off on you.

You may find yourself thinking like an insider, and may begin to form investment decisions prior to your favourite inside investor telling you their thoughts.

When this begins to happen, you know that your investment decisions are leading other investors, and hence you will be in a position to maximise your returns.