Seven picks each month can seem like a lot, but you don't have to buy them all.
February 15, 2021
– Advisor: Daniel Kline
Industries: Financial Services
As a member of 7investing (or as someone who’s considering joining the service) you likely know that our core product is the seven stock picks we offer members each month. Each lead advisor offers up his or her strongest conviction stock each month and shares a detailed writeup as to why they picked that company and we record a full-team call where each of us presents our pick to the team which can ask questions.
It’s a process that gives members access to not only the bull case but also any doubts anyone on the team has. As one of those advisors, I get to make a pick and be on that pitch call, but there’s not actually anything that happens which does not get made public since we share the video pitches with our members (and offer a transcript for people who prefer reading over watching).
We’re all putting an enormous amount of research into our picks and we’re drawing upon years of experience in the industries which we cover. I, for example, cover retail — a field I have worked in — and one that I have followed as an analyst for roughly seven years. In addition, I cover what I’ll call consumer technology, the restaurant business, and broadly everything in the television/streaming/wireless space especially as it relates to cord-cutting.
My colleagues bring deep experience in the spaces they cover as well along with well-honed research skills to dig deeply into whatever companies they consider recommending. That makes the first of every month (when we release our picks to members) very exciting, but also daunting. Many people don’t want to add seven tocks to their portfolios each month and few would want to add the 70-plus we pick each year (it’s not 84 new stocks because some picks get re-recommended). That means that members need a strategy when it comes to using our picks each month and there are lots of options,, but here’s how I do it.
I’m probably the most conservative of the 7investing lead advisors. That doesn’t mean I never make a risky pick (my February pick was high risk) but, for the most part, I’m picking very solid companies with impeccable management, and an established track record. Some of them may not be known to everyone, but it’s pretty rare that a pre-revenue company would be on my radar.
Because of that I generally make a small investment in Maxx and Manisha’s picks after they become public on the first of the month (we have a policy to not buy shares of other advisor’s picks until they get released to our members). I don’t know anything about these companies (usually) beyond what I learn from Maxx and Manisha’s reports and presentations but that does not matter because I know how deeply they understand their space (biotech).
I view these picks as a sort of separate basket in my portfolio that I don’t have to follow aside from when Maxx and Manisha offer updates. These are stocks with stories that may take years to play out and I’m using them to add risk and diversity to my portfolio without having to research new companies in a space where I am decidedly not an expert.
In addition to taking small stakes in Maxx and Manisha’s picks, I have also been swayed by the work of my fellow lead advisors to buy companies that were on my radar that I had not made a decision about. That has only happened a few times, but my portfolio will benefit in the long-term from adding exposure to more companies that have higher upsides (and often more risk) than the companies I tend to gravitate toward.
All of the 7investing lead advisors have different styles and we’re all in slightly different places in life (we often talk about our personal stories on our 7investing Now livestream). I, for example, have a 17-year-old who will likely go to college in the next few years and, while I never intend to retire, at 47 I’m the oldest person on the team. I’ve also been married for 20 years and have to factor in that my wife may not want to work forever.
My timeline, needs, and goals look a little different than my colleagues who are younger, don’t have kids, or, in one case, have multiple kids. Members can view my picks through knowing those things about me and that I’m a relatively conservative investor looking at long-term growth who’s not focused on finding the next Amazon. I’m more likely to add my position in Microsoft than I am to buy shares of a software-as-a-service (SAAS) company that’s relatively new.
Steve and Simon, however, might be more drawn to those SAAS companies and Matt may have a pick in retail or fintech. We’re all different and I tend to use the rest of the team to counter my own thinking. I’m not going to put the bulk of my portfolio in biotech or even SAAS but it does make sense to have my holdings reflect broader thinking than my own.
Seven picks each month can be daunting, but you don’t have to buy them all. Instead, buy the ones where our pitches and writeups captivate you or buy the ones that confirm something you were already thinking. I do a little of both of those and, as I explained above, put my full faith in Maxx and Manisha to give me exposure to companies in a space that I only vaguely understand.