Editor’s Note: This is an excerpt of a longer essay by Palm Beach Research Group founder Mark Ford. It ran in the January 2015 issue of Mark’s Creating Wealth newsletter. In the essay, Mark recounts his “interrogation” of Mega Trends Investing Editor Teeka Tiwari…

From Mark Ford, editor, Creating Wealth: I’ll be the first to admit it. I urged Tom to publish a second investment publication because I was thinking of him and his wealth—not yours.

I told him:

If you want to grow the business beyond its current scope, if you want to become a major player in the industry, you are going to have to think about launching something entirely different that would bring in a whole new set of readers. Find a successful investment advisor who has a different approach—one that is super safe like ours, but with a different angle.

And So the Search Began…

Tom spent months looking at candidates, reviewing their performance histories, and studying their beliefs about investing. Then one day, he gave me a call.

“Mark,” he said, “I found the perfect guy. His name is Teeka Tiwari. He’s been working in finance since he was a teenager. He’s run hedge funds, he’s gone broke, he’s made a couple of fortunes… People love him. He is a superstar. We need to build a newsletter around him.”

I was happy that Tom had finally found someone—someone who met both his standards and mine. But I thought I should play the skeptic. So, I sorted through my notes and created a list of questions that I intended to ask Teeka to help me understand whether his approach to investing was compatible with my own. If it was, I intended to recommend his soon-to-be-launched newsletter, Mega Trends Investing, to subscribers.

Putting Teeka on Trial

Me: Teeka, cumulative returns and averages don’t mean much to me. If I put $1,000 into each of your Mega Trends picks as you recommended them [at the time, there were 24 stocks in the MTI portfolio], what would my $24,000 portfolio be worth now?

Teeka: Mark, [I had] my research assistant crunch the numbers. If you put $1,000 into each stock when I recommended it, you would have invested $24,000. As of mid-December 2014, your portfolio would be worth $27,432.

Me: I’d be happy with that. But let me ask you about your core belief—the very idea of investing in mega trends.

When I think of a mega trend, I think of John Naisbitt, who wrote the best-seller Megatrends in 1982. Naisbitt’s idea, if I have it right, is that a mega trend is when there is a gradual, long-term shift in the way people, in general, think. New concerns start to force out the old ones.

Is that what you mean?

Teeka: Yes, and no. A mega trend, as I view it, is a large-scale and persistent change. For example, in the early 1990s, I knew that wireless phones would rapidly gain popularity as prices for the phones and the service came down. I saw that we were at the beginning of a long-term, persistent change in how people would communicate.

So yes, that’s like Naisbitt’s idea. But identifying a mega trend isn’t enough to make for a successful investment. You have to be more selective than that.

Me: How do you mean?

Teeka: Think of the mega trend as a trade wind. Even if you know which way the wind is blowing, you still have to have a seaworthy ship filled with trade-worthy items. That’s where sound stock selection comes in.

I want to be in the best ship for the journey—filled with the best goods and made of the best of quality. That’s why any stock I buy must have a competitive “moat,” and must be cheap, among other things.

Me: Which leads us to the importance of picking the right company…

Teeka: We are interested in researching only the top competitors within a specific industry. It is usually a very small percentage of the companies involved. All others are eliminated through our vetting process.

Me: What do you mean by “a top competitor”?

Teeka: I mean a company that dominates its space by way of a competitive moat.

A competitive moat is something that is unique to the company… something that sets it apart from its competitors. It’s not a financial metric like “great margins” or “leading market share.” Those are good indicators that a moat is in place, but they’re not the moat in and of themselves.

A moat could be something like a beloved brand name or a superior distribution network. Typically, the moat stems from a product that is nearly unrivaled. And the best moat keeps all competitors at bay. For a competitor to advance past a dominant company’s moat, it’s usually extremely costly, and with little to no guarantee.

Me: Okay, I like what I’m hearing. I like the amount of analysis that goes into each one of your recommendations. But… you told us that an important part of your investment strategy is to identify companies that are undervalued. Sounds like the same principle I use in buying investment real estate… so tell me more.

Teeka: Every industry has its own market valuation measure, so we use different metrics for different sectors. For example, bank stocks are never really priced on earnings. They are priced based upon their book values. The same is true for insurance companies. If you pay three times book value for a well-run insurance company, I can guarantee you will lose money. By the same token, if you pay less than one times book value for a well-run insurance company, I would bet good money that you will make money.

A Final Question

Me: I can see how demanding you are in terms of selecting industry leaders. But how do you know that you are right about the mega trend itself?

Teeka: Every investment decision we make at Mega Trends Investing starts with the question: What if we are wrong about the trend? And I’ve found that even if we are wrong about the mega trend, as long as we are right about the moat and the valuation, our risk in the stock is minimal.

I’ve learned that if we buy great assets when they are cheap, it’s only a matter of time before those assets start to appreciate. The mega trend is like an accelerant. You want to get the mega trend right, of course. But you don’t want your entire decision to be dependent upon it.

Me: Give me an example of what you mean.

Teeka: Mark, I was completely wrong on the mega trend of higher interest rates in 2014 [we’re seeing it start to happen now in 2015]. Rates dropped from 3% to a low of 1.8%. But the MTI portfolio still outperformed the S&P 500. Had I been right on the timing of higher rates, our gains would have been even bigger at this point. But because our stock selection methodology is so rigorous, I beat the S&P 500 even though I was wrong on my macro call.


I have said in several essays that I make it a rule not to invest in anything based on a future expectation. I’ve learned repeatedly that no matter how likely some future event seems to be, there are always surprises. If you bet heavily on a trend and don’t have any metrics in place to protect yourself from the downside, you can lose a fortune, as Teeka did at the beginning of his career.

But I listened to him present his ideas. And I asked him every question I could think of about his core investing philosophy and particular methods of analyzing and evaluating individual companies. And I can see that he has, like Tom and me, a strong inclination away from risk and toward safety.

I am happy that we—the Palm Beach Research Group—are publishing Teeka’s Mega Trends service. And I’m pleased to know that, in focusing on growth, it gives our readers a proven way to bolster their stock portfolios without taking on extra risk.