This Document Is the One Key to Locking In Market-Crushing Returns

Reuters recently reported that the average Wall Street bonus rose by 17% last year.

Even more staggering were profits for broker-dealer operations for NYSE member firms, which soared 42% to an eight-year high of $24.5 billion.

While some of that profit was earned in public offerings and M&A work, a lot of it was from plain old money management fees.

In other words, your hard-earned money. They're paying themselves millions of dollars in bonuses... handing you returns that don't even beat the market.

And instead of funding their private jets or lobster dinners, you could be saving your money and juicing your returns simply by digging deep into one type of filing that's helped me outperform the markets for years...

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You Might Not Even Know You're Funding These Bonuses

This is a truth that many investors have yet to accept: Wall Street, even though it's in New York while you might live clear across the country, is still receiving a lot of your money in the form of insanely high bonuses.

Even if it was paid by some institutional money manager, odds are those Wall Street managers are managing your pension, 401k, college endowment fund, or local government pensions that are paid for with your taxes.

Must-See: This Great Depression-Era "Secret" Helped Transform Two Teachers into Millionaires. Read More...

Now, for big-time, accredited investors, fees and bonuses are hardly worth griping about; I doubt that anyone whose managers were heavy into tech stocks or were focused on the wildly profitable small-bank stock segment had any complaints about fees and bonuses as 2017 came to a close.

And I also doubt that investors who have money with folks like Renaissance Technologies, Arbiter Partners, or David Tepper's Appaloosa - all of which perform at an extremely high level over an extended period - have much to complain about it when it comes to fees, either.

Of course, to invest with those guys, you have to have already "made it," boasting hundreds of thousands, if not millions, in investment capital just to get your foot in the door.

But what about the rest of us?

Those of us who have mutual funds in our IRAs and 401(k)s, or have a municipal pension managed by the thundering herd of Wall Street?

Were their services to us better because we paid them bonuses that were 17% higher last year?

After all, the S&P 500 returned 21.83% in 2017, thanks in large part to tax reform and regulatory reduction from the White House and Congress. So how many of us were better served and had our Wall Street managers improve the market's return by 17% and give us a return of 25.54%?

According to Morningstar, investors who had 100% of their money in either technology or foreign small-cap growth stocks did beat the market by at least 17% in 2017.

This "Secret" Helped Transform Two Teachers into Millionaires: Donna and Dave R. were both teachers in Boston. But today, they're retired millionaires who are also earning $10,000 a month in income. Their secret? Much of their wealth is due to a Great Depression-era "program" most have no idea exists. Learn more...

Active money managers had their best year relative to the index in eight years, and still, less than half were able to match or beat the indexes.

Now, keep in mind that these fees are not inconsequential. A sampling of SEC filings shows that investors with less than $5,000 can pay as much as 2% a year, and even those with $1 million to invest can be paying 1.25% a year to have the professionals manage their money.

That may not sound like much until we do a little math, a long-term compound.

Try to stay awake for this one. It's definitely worth it, and besides, I'll be quick...

The 90-year average return for the S&P 500 is 9.8%. If your manager can match that performance (and history says that, over time, more than 60% will fail to do so), then a 25-year-old who puts $3,000 a year into his retirement plan will have about $2.2 million by age 70.

However, the poor schlub who pays an average of 1.25% in fees will end up with just $1.6 million, and the even poorer schlub spending an average of 2% will sport just $1.2 million.

But all of this is only if - and believe me, it's one big "IF" - their money manager can match the market for an extended period.

Most won't even survive that long, much less outperform.

That's why I think it's downright outrageous to pay these managers egregious fees for mediocre returns.

It's nothing less than tragic that most investors don't know the one totally free tool they can use to position themselves to beat the market.

And believe it or not, the tool is in the form of a publicly available filing...

The Fee-Free Way to Outperform the Markets with One Document

I'm talking about 13F filings.

You may recall that these forms are merely lists of the securities money managers and hedge funds own as of the end of the most recent quarter.

It's no secret that I spend a lot of time reading these filings every quarter - and it's high time you start doing the same.

Because by comparing them to the previous quarter, we can see exactly what the "who's who" of Wall Street is buying and selling. There are some cult-like followers who try to win by simply buying what the famous folks, like Buffett and Icahn, now own.

But that's not really a successful strategy anymore. Far too many people follow the rock-star investors for us to gain any real edge.

Me? I track some under-the-radar folks with excellent track records to look for ideas to add to my research list, but I don't blindly follow anyone. That's an expensive mistake.

The only thing I blindly follow is the cold, objective data contained in these 13F filings. You'd be surprised at how much windfall potential can be found by unearthing the trends and patterns developing on Wall Street.

If you can get into undervalued sectors and stocks just a little before the herd and get out a little before the flood, you gain the sustainable, elusive edge I just mentioned. You can see the herd and the flood developing - all by digging deep into the 13F filings.

I also read a lot of random filings, and I can tell you that an awful lot of the fees being collected are a result of "marketed mediocrity."

The vast majority of these manager filings look a lot like a list of the S&P 500 comments, with some slight shifts in weightings.

Basically, you're paying 1.5% or 2% for a closet index fund. And as I've mentioned before, indexing is the easiest way to kill your long-term returns.

Investors with a $500,000 portfolio would pay as much as $10,000 a year for the esteemed privilege to underperform the indexes.

You would be better off spending $5,000 on excellent, independent research and managing your money yourself.

Add the rest to your account or take the family on a big vacation to the Grand Canyon, and you will still come out way ahead of those who pay Wall Street too much for too little.

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About the Author

Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of Peak Yield Investor.

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