When I mentioned casually to another blogger that I had beaten the market over the past 10 years, he replied (with a great deal of wisdom, I’ll add) “Yeah, Andrew, everyone online has beaten the market.”
I fully respected that, and I didn’t counter his insinuation that I could probably be trusted about as far as he could swing a 200lb hog.
When it comes to market beating promises through mutual fund sales, online gimmicks, newsletter and guru following, you’re best seeing most for what it is: somebody out there trying to make a buck.
And to paraphrase what Fitzgerald’s character, Nick Carroway, said at the opening of The Great Gatsby, fundamental decencies weren’t handed out evenly at birth.
But for what it’s worth, I’ve come to think that it might be possible for mere mortals to beat the stock market indexes.
Sure, there are probably as many ways to beat the market as there are evasive strategies from a pack of hungry wild boars, but I think I’ve boiled down a few from my experience that might be worth sharing:
1. Forget about gurus on television and forget about actively managed mutual funds. Laden with smoke and mirrors for the former, and enough fees to anchor the latter to the oars of mediocrity, you’re better off going solo, if you have the temperament.
2. Forget about trying to beat the market every year—don’t even think about trying. In my view, no decision should be made on whether somebody thinks a stock is going to do well “this year” or “this quarter”. Most of history’s best investors are/were value oriented, and they were patient. Stocks you bought 3-5 years ago could be those rising to the front today. Be patient. The objective should be beating the market by the biggest long term margin—not trying to sliver it every year.
3. Buy what isn’t popular. If you want my tip de jour, find the studliest businesses you can in the ugliest industry. What’s ugly now? American residential home builders. Oh, but don’t buy the homebuilders, check out their suppliers. Find a handful of the best ones you can, fundamentally, and buy more and more of their stock if/when the economy worsens. My pick: Simpson Manufacturing (SSD)
4. Do you remember the old “beer goggle” expression—relating to…well you remember, right? Let’s just say that China and SE Asia have beer goggles on for certain Western name brand products that can do no wrong. “What, just $25,000 for a set of Cartier diamonds. I have to have them!”
Don’t think I’m kidding here. SE Asians and the Chinese are getting wealthier by the year. And they’re crazier about Western status brands than we were about The Beatles.
Seek out the highest quality, highest status western brand names, and buy the best of those stocks you can. You might want to check out Tiffany’s. It could be one of the safest and most profitable ways to invest in China.
And while Estee Lauder isn’t a very good price for now—just wait for it. Stick it on your radar and wait for a crash. This stock should put most of the Asian ETFs to shame over the long haul. And the reporting profit numbers coming out of this company? Well…you can more or less trust them.