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Frank Curzio

Frank Curzio founded F.X.C. Investors Corp. in 1974 and has been a money manager since 1988. With over 25 years of experience in the financial industry, Mr. Curzio has become one of the most well-known analysts on Wall Street as well as one of the most quoted.

Books

Awareness of Indirection, Vantage Press, 1987

Safeguards and buying opportunities

1. Speculate with a small portion of your funds.

Preferably only 30% in aggressive situations. Invest a little to make a lot, and not a lot to make a little.

2. Do not buy on margin.

All securities involve risk. Some of the most prestigious and highest rated ‘A’ securities have had temporary devastating plunges. (Sears Roebuck from $61 to $15, Con Edison from $18 to $3, GM, Ford and Citicorp A rated bonds from $1,000 to $490, etc.). If a stock drops 50%, given time it may come back and may trade over your original cost.

3. The best buying opportunities usually prevail when a company reports lower earnings and when adverse economic news is widespread.

Purchase of stocks immediately after glowing earnings reports or optimistic press releases often results in buying at the top.

4. Only invest in companies audited by one of the big five accounting firms.

These accounting firms audit about 90% of the companies listed on the New York Stock Exchange (NYSE). Their clients account for most of all sales in the U.S. and approximately 90% of corporate income taxes. There are over 10,000 public corporations trading on the various stock exchanges and in the over-the-counter markets. One of the leading reasons why investors lose money is due to financial statements that are not prepared in accordance with Federal regulations (Section 13 or 15 (d) of the Securities Act of 1934). If the figures are incorrect, your investment in the stock is subjected to substantial or complete loss.

5. Watch company credit ratings.

Institutional fund managers pay close attention to credit rating from agencies such as S&P and Moody’s. Increases in credit ratings ultimately result in higher quotes due to additional monies available for investment in these stocks. Decrease in ratings usually result in lower stock quotes.

6. Exploit institutional window-dressing.

The institutional funds represent approximately 80% of all monies in the U.S. market. The managers of these funds must answer to their shareholders and superiors - mutual pension funds are required to issue quarterly reports to their respective shareholders. Near the end of the quarter, stocks which were down or close to their yearly lows, are usually sold by the institutions (so they do not show as holdings in the quarterly report), causing even lower stock quotes. And stocks near their highs are purchased, thus enforcing higher quotes.

If you choose to purchase a stock because it is low, wait until after the end of the quarter. Chances are, it will be trading lower. Of course, there is no guarantee the stock will not trade even lower in the upcoming quarter. If you are going to bottom-fish, be patient. Or, if you want to sell a stock that is trading near its high, chances are it will be higher just before the quarter ends.