How do we engineer success and outperform the market average? No secret, no magic! Here are the five principles of engineering your investment success:
1) Master the formula of investing:
Understand that investing is one side of the financial wealth formula:
Investing money = Income - Expenses.
Regardless of how much income you earn, you must manage your expenses such that you can afford to invest. This means you do not invest the money you need to live your daily life, and if you need to invest more, look for ways to manage your expenses first.
2) Focus on what’s under your control:
No one and no mathematical model can yet predict the market fluctuations. If there was a prediction model that worked, there wouldn't be any stock market. Instead of trying to predict the market, focus on managing the aspects of investing that are under your control (e.g. how to evaluate a company based on facts) and never duel over variables that are out of your control (e.g. forecasting and timing the market).
3) Use technology to minimize decision making biases and fallacies:
Even the savviest investors are prone to decision making fallacies. Making decisions based on a hunch, or deciding first and collecting data to confirm it later are some examples of mind fallacies. Use software and algorithms to collect and synthesize the data and adhere to this process to gain an upper hand in investing.
4) Hold until facts change:
Everyone defines buy and hold investing differently. The most practical example we have found is that market fluctuations - especially price fluctuations - do not matter. Have 2-3 reasons for each investment you make. Periodically validate them and hold until those reasons are valid.
5) Live as an investor:
Investing is a lifestyle. Just like being a foodie, a globetrotter, a runner or a movie-buff is a lifestyle choice, so is being an investor. Dare to call yourself an investor, and invest in companies and products you relate to, and leaders whom you admire. Investing is the language of life, and you can make your portfolio represent your choices and your beliefs. It's a lot more real and way more fun!
As we said, there is not secret or magic behind investment success. It is engineered!
Getting inspired by the companies and brands that are shaping our lives is one of the best ways to invest here at Stock Card HQ. It meshes investing into our lives and makes it fun. It personalizes investing according to who we are, what we believe in, and how we live. It is a romantic way of looking at investing, I realize. But, when you get inspired by the world around you to pick good investments, it is a lot more enjoyable. And, that's exactly what one of our early users has done. Interested? Read on!
Pet-inspired portfolio by a Stock Card user, Rachel:
Travel (Camping World, Ticker: CWH)
If Airbnb was a public company, we would have invested in it already. Their motto of belonging to any destination near or far embodies Anthony Bourdain's way of living. But sadly, for us, the public market investors, we still have to wait for Airbnb. While we wait, let's take a look at Camping World. Anthony was an advocate of traveling as a means to experience the world. While there are many travel companies to choose from, traveling by means of camping is a trend on the rise through which people, especially younger people, are experiencing the world. A well-managed company that is now available in an undervalued price range; what's not to like?
Storytelling (Walt Disney, Ticker: DIS)
In the business of storytelling, no one comes close to Disney. Time and time again, Walt Disney studios take the kid in all of us to lands far far away. While the stock hasn't been performing as per our liking in the past few years, the recently launched sports streaming services is a step towards the right direction. Walt Disney is a well-managed company, operating in a growing market, worth owning by those of us that have the patience to buy and hold.
This is our way of celebrating the work and life of Anthony Bourdain, the man who inspired us to travel and tell stories. Thank you, Tony Bourdain! You were epic, and you will be missed!
Last year we ran a special Stock Card Weekly about how you could have outperformed the stock market significantly had you listened to Mary Meeker in 2008. Our community loved it so much so that we decided to create a Mary Meeker portfolio. We picked up shares of the companies she discussed in her 2008 report. This week and after a decade, we repeated the process again based on her latest report in 2018. This is a free, open-to-all portfolio that everyone can use to put the average return of the stock market in the dust. As always, there is no magic here. Mary Meeker observes the world as it happens; we read her reports and invest accordingly. This doesn't mean that this portfolio doesn't go down, but over the course of the years, the companies that are shaping our world have a very high likelihood to reshape our wallets too.
Take a look at this portfolio by visiting the Investment Ideas page on our website!