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?
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:
Emotional Discipline:
Patience and Long-Term Perspective:
Value Investing and Dividends:
Monopolies and Emerging Technologies:
Low P/E Ratios:
Management Quality:
Non-Systematic Risks:
Bond Portfolio:
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?
It's possible you're just doing superior analysis. But in most cases, it's luck that takes a long time to balance out. You've probably heard the story of the coin flips, i.e. in a room of 1,000 people someone will flip heads 10 times in a row by random chance.
Only saying this because you asked. Not knocking anyone's stock picking abilities. A small number of people are indeed great.
I like your first and third approaches because they address mispricing (i.e. value implies market doesn't trust the dividend to last, but you're finding the ones that will, and low P/E implies risk to business model but "build things' implies a more sustainable business). Investing in monopolies seems less compelling since the market herd tends to love that approach as well.
Fooled by Randomness
Shareholder meeting when?
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