Anyone else just good at investing?

Has anyone else just generated above average returns for years on end? I took control of my portfolio around 10 years ago and it has honestly been pretty straight forward.

A couple things I learned from working in corporate America: Management will steal, I mean, may themselves first so make sure there's not a big bucket they have to fill first. This is every bank in the country. There's plenty of reasons management sells stock but only one reason they buy it. Buying stock in the open market to compensate employees is a great sign. See. ASML. Creating stock to pay employees is an awful one. See LinkedIn or Salesforce.   

Invest in value stocks with dividends they can repeat. ADM. IP. FLNG. 

Invest in companies with monopolies (esp. emerging technologies). TSMC. ASML. ORCL

Invest in companies that build things with low P/E. LEN 

My losers are non-systematic: 

NYCB: Management SH*T the bed. Bought at $7. Currently $3 something. 

VW Group (Either VWAPY or others): Undervalued based on current and near-future earnings but bad news and no excitement. International shipping issues. Too big to quickly turn the ship. 

I also have a semi-active bond portfolio with 6.5% average HTM yield BBB+ 3.5 year duration. Not great but it is safe and a little better than the current 5.5% cash yield. Not too proud of that but it is what it is. 

If you would have told me in college that making money in the stock market is actually pretty easy, I would not have believed you.

Has anyone else had this experience? Why is it so easy to beat all these asset managers? 

5 Comments
 
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Based on the most helpful WSO content, here are some insights into why some investors might find it easier to generate above-average returns and why it might seem easier to outperform asset managers:

  1. Emotional Discipline:

    • Successful investors often have strong emotional discipline, which is crucial for making rational decisions and avoiding panic during market volatility. This is highlighted in discussions about the importance of emotional discipline in investment performance.
  2. Patience and Long-Term Perspective:

    • Many investors fail because they lack patience and are swayed by short-term market movements. Those who stick to their strategies and have a long-term perspective tend to perform better. This aligns with the idea that investors are often their own worst enemies due to emotional reactions.
  3. Value Investing and Dividends:

    • Investing in value stocks with reliable dividends can provide steady returns. This strategy is supported by examples of successful investments in companies with strong fundamentals and consistent dividend payouts.
  4. Monopolies and Emerging Technologies:

    • Investing in companies with monopolistic positions, especially in emerging technologies, can lead to significant returns. Companies like TSMC and ASML are examples of such investments.
  5. Low P/E Ratios:

    • Investing in companies with low price-to-earnings (P/E) ratios can be a sign of undervaluation, providing opportunities for growth. This strategy is mentioned in the context of investing in companies that build tangible products.
  6. Management Quality:

    • The quality of management is crucial. Companies where management buys stock in the open market to compensate employees are seen as positive signs, while creating stock to pay employees can be a red flag.
  7. Non-Systematic Risks:

    • Even successful investors face non-systematic risks, such as poor management decisions or external factors affecting specific companies. Examples include NYCB and VW Group, where specific issues led to underperformance.
  8. Bond Portfolio:

    • Maintaining a bond portfolio with a reasonable yield can provide stability and a safe return, even if it is not as high as other investments. This can be part of a diversified investment strategy.

In summary, the combination of emotional discipline, patience, value investing, focus on monopolies and emerging technologies, attention to management quality, and a diversified approach can contribute to above-average returns. However, it's important to recognize that even successful investors face challenges and non-systematic risks.

Sources: Is Anyone Bullish on the Future of Asset Management???, Has anyone landed an analyst/associate role in Asset Mgmt or Equity Research with no experience? How?, Why doesn't everyone invest in index funds?, Why Investors Fail, How Do Hedge Fund "Geniuses" Einhorn and Ackman Still Have Any AUM?

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

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