As an accompaniment to this article, I will be going LIVE on YouTube this Thursday at 1PM ET.
If you started following me in 2016, there’s a good chance you’re not reading this.
I lost money that year. A lot of people were mad about it.
If you started following me this year (or late last year), the title of this article was chosen for you. The reason is obvious. If 2022 ended today, it would be a losing year for my portfolio.
It would only be my 3rd losing year since 1996, but I don’t expect that to make you feel better. Just know this — my average return for 2018, 2019, 2020, and 2021 was in the ballpark of 100% per year (see my public tracking sheet for the proof / details).
In other words, the average person following my picks lost 3% of their money in 2016, but grew their money 1,500% from 2018 through the beginning of 2022.
This is nothing new. I’ve averaged over 40% per year on my invested capital dating back to 1996. Aside from 2022, 2016, and 2002 (my only other losing year), it’s been an easy ride for anyone who follows me.
However, if the start to 2022 has made you give up on my picks and method, I can only say…
SORRY & GOODBYE… SINCERELY.
For everyone else, the rest of this article is for you. Let’s start with this quote from the GOAT:
At times like this, most investors forget this rule.
Unfortunately, this is one of the key rules that determines if an investor will be average or rich.
Based on my experience, it’s critical to know (and believe in) the TRUE VALUE of your stocks (which differs greatly from the CURRENT PRICE). I know this because I was a losing investor before I learned this lesson. Before 1996, I lost money in 1993, 1994, and 1995 (my first three years of investing in stocks).
The key was befriending an experienced professional equity analyst (Wall Street stock analyst). He taught me that the cheat code to investing success was knowing the TRUE VALUE of the stocks you hold.
Once you have that, the only challenge is maintaining confidence in your professionals’ analyses and calculations (not giving up when the ride gets rough)…
…and that’s where Buffett’s quote comes in.
This year’s stock action is the test of whether (or not) you have what it takes to be an exceptional investor.
This Thursday’s LIVE will expand on this topic and provide details on the MAJOR CHANGES I’ve made to my portfolio in response to recent events and information… so join me LIVE on YouTube this Thursday at 1PM ET.
By the way, as I write this, Summer Infant (SUMR) just announced that it will be acquired for $12 per share in cash.
It was $6 when I added it to my tracking sheet (and $19 when I removed it). Recently, it fell back into the 6s, but I held off on re-adding it to my sheet due to market risks (and ongoing supply chain issues).
Despite this, the company was clearly worth $12.
This tells us two things… 1) a professional valuation/calculation methodology never stops working. IT’S JUST MATH… 2) investors are becoming more interested in buying undervalued companies. This is at least the third acquisition I’ve noted among small companies in the past few weeks.
So get ready. This upcoming LIVE promises to be a movie.
Please spread the word… and catch you then!