The Investing Secret Hiding in Plain Sight

A Marcus Today Principle – “Good things happen to stocks in good sectors”.

So, if the iron ore price goes up and FMG announces a special dividend, don’t be surprised. It would not happen if the iron ore price was going down and the sector was out of favour.

So in Big Tech, the Nvidia deal overnight (investing $5bn in Intel) is a consequence of Nvidia’s success. Good things happen to stocks in good sectors. Nvidia was up 3.5% and Intel up 22%.

But what you might not realise is that Intel is actually the biggest tech dog in the US. It has missed every technology revolution in the last five years. If Nvidia did this against the background of a falling NASDAQ without AI sentiment running hot, the share price of Nvidia would have fallen, because it is investing in a shitty company.

But the NASDAQ is on record highs, Nvidia is bulletproof, and every occurrence in the tech sector is welcomed with open wallets. It’s a theme. It’s running. And it carries all before it.

So what if Intel is the biggest “fail” in the tech sector and has dropped 74.5% from 2020 to 2025 whilst the rest of the sector boomed?

To explain “Good things happen to stocks in good sectors”, let me tell you a story.

 

The Client

One of my past clients was a bit of a legend at my broking house. He was focused. He was objective. He was a young Australian who lived in Bali. He had inherited $500,000 that he didn’t expect or need, and with no stock market knowledge, he set about investing it.

His first step was to find me. Sought me out. He even did his homework when finding a broker.

“BB” (as my colleagues called him – a play on Bali Boy) interestingly, had all his own ideas, and almost all of them were good. It reached a point where my broking colleagues started surreptitiously monitoring his account in the admin backend to find out what he was doing and when. The chatter in the lift was regularly about what “BB” had just done.

Bali Boy was a bit unique for a couple of reasons.

One, was that he only ever held one to five stocks. No diversification for him.

Two, he didn’t want advice, from me or anyone else. If he was going to lose his money, it was going to be him that lost it, no one else. And if he was going to make it, it was going to be him who made it.

I was simply someone he used for information, and someone he used to execute trades for him. He never wanted to hear my lame morning meeting ideas. They were for the sheep, which suggests he was the wolf.

But he wasn’t a wolf. He was a sheep as well – a very nice, pleasant sheep. But he was a touch smarter than the average sheep. He was the sort of sheep who would let someone barge the queue at the abattoir. An independent sheep, and ultimately, a very pleasant guy.

(Note to clients – you get much more out of service people being “nice”.)

When I first “met” BB as a client, he had his inherited $500,000. By the time I left him to go and write newsletters? Millions.

I wouldn’t be writing about him if he had lost money of course, but he didn’t, so I am.

The incredible thing about BB was his focus. Zero to five stocks with a 100% hit rate. And the trick of it was this – take note.

He didn’t trade – he played themes.

When I was talking to him (2005 – some years ago now), he was playing the iron ore theme, and we were in the middle of the Australian resources boom (China was building Brisbane every three months). He “sat” most of his money in BHP. He held Fortescue Metals when it was just an explorer. Never saw him sell it. He also played uranium. He held Paladin when it was less than 5c. He sold it the day Fukushima blew up (it got to $10).

I would ring him up and unimaginatively tell him to buy Leighton Holdings because the analyst had told us it was cheap, and he’d say: “Marcus, I don’t know the stock, I don’t care if it’s cheap, what’s the theme, what’s driving it, what’s the catalyst? Without that, without the fundamentals getting better, the price won’t go up, so why would I buy it?” And there’s the key.

He only bought and held stocks that were riding a wave, because of some catalyst. The static fundamentals alone, cheap or expensive, were/are not enough. The fundamentals need to be on the move, changing for the better. Let’s repeat that – the fundamentals need to be changing for the better.

The resources boom was a theme. Anything close to the theme was having its fundamentals propelled, changed, every day, for the better.

Cue Marcus Today Principle – “Good things happen to stocks in good sectors”.

We used to watch in awe as Bali Boy’s iron ore stocks announced better-than-expected results (how did he know?), or declared special dividends (was he analysing the accounts?), or announced share buybacks (surely he knows someone), or got taken over (he’s inside trading). We scratched our heads. Just HOW did he know?

Well, he didn’t. He knew nothing we didn’t know. But what he did know was that good things happen to stocks in good sectors. The iron ore space was booming, so, in hindsight, of course companies had better-than-expected results, of course they declared special dividends, of course they announced share buybacks, and of course other companies wanted to take them over. That’s what happens when you have a strong core driver in a sector. Good “luck” follows (a takeover, buyback, special dividend, better-than-expected results).

It is the same in Big Tech at the moment. All the Big Tech companies are making a fortune. When companies have money, they do deals, they announce investments, they have great results, they have share buybacks, they pay special dividends, and they take each other over. And these, arguably, blatantly obvious observations, can make you rich the same way the iron ore theme made Bali Boy rich.

 

Conclusions

Bali Boy succeeded because he came at stocks through themes. Let’s repeat that – he bought stocks because of themes and held those individual stocks until the theme ended.

These days, we have ETFs that allow us to buy themes a lot more easily without the individual stock risk. He didn’t have that luxury. We do.

He found those themes easily – it wasn’t rocket science. He simply applied himself to the task of finding themes. As we used to say in broking: one good idea a year makes for a very good year. One good theme a lifetime can make for a very good investing lifetime. He did it by simply reading. In Bali. Plenty of reading time in Bali. We can all read. You don’t have to be an analyst to pick up on BNPL, milk powder, AI, Big Tech, weight-loss drugs, cybersecurity, robotics… all you need is the awareness that one good theme can make you rich and keep your antennae tuned for the next one.

He was objective. As an Australian in Bali, I felt his edge was that he came at Australian stocks from the “outside”. He was the Man in the Moon. The Man in Bali, if you like. His objectivity was key. Let’s repeat that – objectivity is key. He saw what we missed because we were up too close. He saw that China had to have Australian iron ore to build a city the size of Brisbane every three months. That’s all it took.

For Bali Boy it took one theme. Poof. Rich.

The global expansion of nuclear power made him richer. Fukushima ended that theme. He knew it that day. And sold.

Spotting the end of the theme is obviously a bit of a trick as well.

Maybe now you start to understand what we are doing in the Marcus Today Managed Strategy Portfolio.