Sometimes it's important to really be in touch with the core reason as to why you invest.
August 26, 2021
Most investors have a clear style. It’s not easy to boil your approach down to one word, but doing so can help you focus on exactly what drives your investing decisions.
Picking that word, however, requires some soul-searching. You need to really examine why you buy the stocks in your portfolio and whar one single word connects them all. For some people that’s easy. If the word “aggressive” or “cautious” pops into your head then this exercise might be easy. In other cases, however, that one word does not immediately come to mind, and finding it requires analyzing what you have purchased and why.
We asked the 7investing universe to share the one word that describes their investing style on Twitter and received a wide variety of answers. Simon Erickson, Matt Cochrane, Steve Symington, and Macc Chatsko joined Dan Kline on the August 20 edition of “7investing Now to share the one word that describes their investing style while reacting to the ones shared by the 7investing audience.
A full transcript follows the video.
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Dan Kline: But we’re going to pivot now. And we’re going to talk about what one word best describes your investing style. Simon, this was your question on Twitter. So I’ll let you go first. What one word would it be?
Simon Erickson: Yeah. And just to kind of set the table for this, Dan, I always really liked to put out these polls, you know, because investing is such a personal thing, right? There’s no absolute right way to invest, or there’s not one absolute best word to describe yourself as an investor, we’re looking for different things out there. And the interesting part is, is I think it’s important to know thyself, right to know that investing is personal, know what kind of investor you want to be. And then actually find companies that will align with that mentality.
If you’re super risk averse, and you don’t like to see the volatility of companies shooting up and down, maybe you don’t want to go after these to be small cap biotech companies that you’re going to have to get used to volatility as part of the name of the game. On the other hand, if you’re investing for 20 years, and you’re putting a small amount in every month, maybe you want to find really, really small cap companies like those small cap power caps that I just mentioned.
So I think it’s important to not only know thyself, but also look for the companies that match your definition of what type of investor you are, and then kind of figure out how are the companies operating? are they putting all their money back into r&d? Because they’re in growth mode right now? Are they sharing all of their cash flows out as dividends? Because they’re a mature part of the industry right now?
I mean, this will kind of align with not only the kind of companies you picked, but how your returns are being generated in your portfolio. Investing is incredibly personal, Dan, I think there’s no right answer, like I said, but again, that’s kind of the key though. So we have here with 7Investing, and why we have different types of companies every single month.
Dan Kline: Matt Cochrane I will let you go next. What is the one word that best describes your investing style?
Matt Cochrane: Moats! I look for economic moats and companies, right, I want companies with, with competitive advantages. And the thing I like about that is it can take me across industries, though, like I obviously have a special interest in financial services and FinTech and things like that. I’d like learning about all types of companies and all types of businesses, all types of all types of industries.
And I love that like just looking for moats in companies competitive advantages can take me across all these different areas. I can learn about different companies. I love doing that. It’s fun for me, I geek out on it and but that’s what I look for. I look for a company with like some kind of advantage in its business model, or like its its its area of expertise.
Dan Kline: This is just Matt bragging that he lives in a castle. That is why he likes moats. Simon, I wasn’t going to call you on this but you did not give me one word you You gave a very good answer. But there was no one word and you’re the boss. So I wasn’t gonna call you on it. But you pointed it out in our private chat.
Simon Erickson: Innovative, innovative, Dan. That would be the word I describe myself as an investor shaking up the status quo and doing something that isn’t isn’t vastly appreciated by a lot of the media that headlines out there yet.
Dan Kline: Steve, I’ll throw it to you. Caffeinated is not an option.
Steve Symington: Always caffeinated. I’ll cheat a little bit because I was tempted to say disruptive because that’s the kind of companies that I tend to look for I look for companies that can either disrupt or create new industries themselves or fundamentally change the way we do things, but I’d say more than anything patient is how I function right?
I buy companies with multi year timeframes and that’s the way we all invest but sometimes it takes a long time for the thesis to really play out in earnest and for kind of your life changing gains to happen. And, and and i think patient describes it well, like you look at the best tech stocks out there. You know, I bought Nvidia back in like 2012. And, you know, for example, but it took me it was only just a few years ago when it really, really skyrocketed. And it’s one of those things where you tend to just sell for an easy, double or triple or quadruple or whatever. But for the biggest gains you have to be patient.
Dan Kline: And when we say we’re long term investors, it’s because we’re actually long term investors. And one of the challenges about what we do is obviously, you kind of want to take, you know, look at the scorecard and consider what the score is. And the reality is, you’re still in the first inning or the first quarter. So we are all long term buy and hold investors. Maxx Chatsko, what is your single word here to describe your investing style?
Maxx Chatsko: I came up with early, it’s kind of similar to Steve’s, I guess, just from a different angle, we’ve covered different parts of the market. I think a lot of people are very interested, a lot of investors very interested in owning tomorrow’s best stocks, tomorrow’s best companies, but very few tend to have the patience to see through.
A lot of the trendiest companies now the ones that are really taking off, as Steve said, even in biotech, drug development, synthetic biology, those did nothing three years ago for a very long time. And now they’re kind of taking off. So if you can identify those companies early, with good rigorous research and frameworks, and then stick to it accumulate over time, and build a position that you’re comfortable with, eventually, that does pay off in the long run. So we say buy and hold a lot in investing, I kind of change it up a little bit to accumulate and wait. I think those are two better verbs.
Dan Kline: So we’re gonna go through some of the ones you shared with us on Twitter, but we’re gonna start with mine. And of course, we would love your questions and comments. Sam Bailey, if you want to share mine, I said experiential. What does that mean? I like to invest in companies I can put my hands on, I can visit. I start with is this part of my everyday life, it’s not every company I invest in. But a lot of companies I invest in started with, wow, this is something I like. And it’s important to me. So maybe it’s actually a good investment.
Now, not every company I like, is a good investment backup was a publicly traded company. For example, I would not have been a Dunkin Donuts investor, though I was a regular Dunkin Donuts customer. Maybe not that regular, I’m actually more of a Starbucks guy. But that being said, just because you like something doesn’t mean it’s investable. But that is a reasonable place to start, I’m going to throw out pics from our audience from the from our Twitter universe. And then each of us can weigh in with a few words, just just just one person per thing. I’ll start with Simon, let’s throw up our friend, Ganga Hassan, who I was actually emailing with this morning. And he says, stakeholder Simon that touches on one of our 7Investing principles.
Simon Erickson: So perfect, you get a great idea. I mean, you’re an owner in the business, the decisions that managers make on what their company is doing with your capital will directly influence your returns. I love that one.
Dan Kline: Len, we will comment on your question later, Robbie shots has all or nothing for Maxx. Yeah, with Maxx’s picks, you have to have long term conviction because they don’t play out quickly. Max, there’s no express drug approval, right? You can’t just like think of it on a Monday and have it in market and Friday. Hey, like this is going to take years for many of your companies.
Maxx Chatsko: Yeah, the realities of drug development do slow you down, right? So it’s over an eight year period there, I’d only be like a handful of days that really actually matter. And that’s not really necessarily true. But you know, I also I choose like companies that I only invest in terms of like technology platforms, right. So even if they one failure, two failures, or five failures, in the long run, if they execute well enough and they have enough successes, then that’s fine. It should add value to shareholders over time, but so important that you know, we have this like idea that drug development can be binary. And I guess that’s not really how I approach it necessarily.
Dan Kline: We’ll take the next one from Super Mario investor, MD, who I hope is actually a doctor. I know he’s a Magic the Gathering fan. We chatted about that on Twitter and he says optimistic. Matt Cochrane you know, I am a unbelievably optimistic person I have a a very things are gonna work out is optimism. How you fare? How do you view optimism in the market?
Matt Cochrane: Yeah, there’s a great anecdote out there. I forget who said it. But like pessimists sound, smart, optimists make money. It’s good to remember that, like, the US stock market over time, is faced, like a lot of crises and challenges and depressions and wars and things like that. And yet, for the long term shareholders, they’ve always come out ahead. So it’s definitely good to be optimistic in the market. It’s hard to invest in hold for the long term if you’re not.
Dan Kline: I’m gonna have two in a row that I’m gonna throw to Steve here. Our friend Brad Freeman at stock market nerd says slow and then Brian says methodical, pretty much the same words there, Steve. But your thoughts here?
Steve Symington: Yeah, I like those words and, you know, slow and methodical, I think that speaks to the idea. And one of the the ways that I approach investing is I’ll find a company that I like at a valuation that I like. But I’ll also I also won’t buy it all at once. You know, if I’ve got money that I want to put to work I’ll, I’ll open a position over the course of several months or several quarters. And and I mean, there’s stocks I’ve owned for more than a decade that I add to gradually every once in a while. And yeah, slow and methodical might not be as exciting as some of the day traders out there. But it works. And that’s that’s how you really generate wealth over the long term.
Dan Kline: So I’m going to take the next one because I don’t think it would be fair to throw it to Maxx without giving him time to think about it. But Thunderdome capital says artisanal. I think this is a really interesting word, because we really are curating and picking a portfolio of things that’s very unique to us. So I don’t know if that you know, completely matches the definition of the word machismo, but I really like the spirit there. But we will give an easier one to Maxx Chatsko. This comes from MS and he says long term that is of course, the foundation, followed by plant saying unproductive and growth chaser saying long term lazy. Yeah, that’s the nice thing about being long term, you do kind of get to be lazy, or you don’t have to aggressively follow everything every day. Maxx, your thoughts here?
Maxx Chatsko: Yeah, I agree. It’s kind of like what Matt was saying, right? You know, it’s, it’s simple, but it’s not easy, right? Being a long term investor, it’s really easy to let your emotions get the best of you or maybe pay too much attention to noise. So as you get more experienced as an investor, you kind of learn to tune those out, to tune into the signals, and not let your emotions get the best of you. So a lot of it is kind of being lazy. I guess it’s a funny way to put it.
Dan Kline: We’ve got four more here. So we’re gonna go once more around the horn, we appreciate so many of you weighing in. We will get to your questions and comments. We got a great one from Len that we will get to at the end of the programming.
But three says and Simon, I’m plan this coming to you. He says 7Investing, we are honored if that’s the word you’re using to describe your investing style. But Simon, that’s kind of the point of what we do. Right?
Simon Erickson: I love that answer the most. Thank you. Sorry, I just kind of did piggyback on that. I guess you know it because 7Investingis so diversified, we try to make it easy. On our site on 7Investing.com/recommendations. You’ll see at the top, we have filters, right? So if you are saying you’re a long term investor, or you’re a optimistic investor or a Ura, you know, all the different things that were mentioned here today, you can find kind of investments that align with those, I think the next step is to say, Okay, what kind of investor am I and then when you’re putting money to work, make sure that that aligns with, with what you’re expecting what your risk tolerance is, what markets you want to get into. I’m trying to make it super easy to see all of our picks. So So thanks for the shout out. I really glad that you liked the service.
Dan Kline: I love seeing on Twitter when someone is a fan of one of our investing styles. And that’s kind of why we do and I talk a lot about movie reviews that you knew if you liked what say Roger Ebert liked that you would sort of use his picks more.
So if you look at what I’m picking. And that’s more comfortable for you than let’s say Maxx’s picking. Or maybe it’s a couple of us. We have something for everyone. We have three more, we’re going to go through them quickly here. Durham Dempster says selective. Matt, we are absolutely selective your quick thoughts here?
Matt Cochrane: Yes, absolutely. We believe we can beat the index. And at the end of the day, you know, like subscribers, that’s why they subscribe to us that we can, over the long term like our performance will beat the index. And by being selective, like by picking out winners and ignoring losers, we can outperform and have better returns on our portfolio to help us better accomplish our financial goals, whether that’s retirement or college savings, or travel, giving to charities, whatever your financial goals are, by being selective with our stock picking, we hope you can better achieve them.
Dan Kline: Plus, Matt’s gonna pay for dinner next week. Security Sherpa says opportunistic. Steve, your thoughts here? Oh, Steve is either doing a mime or perhaps.
Steve Symington: Of course, you know, opportunistic. And that’s the idea of our seven top stock ideas that we release every single month as well as our most intriguing ideas chosen from all of our past recommendations every single month and our subscriber call, which we just discussed this morning with our members.
We’re opportunistic about the stocks that we choose, we tell you which stocks we like in any given in any given month in any given week. And we talk about it on a continuous basis. So obviously opportunistic, yes, of course.
Dan Kline: I will also say security Sherpa sounds like a low grade x men. That is a great that is a great superpower. We can picture Maxx Chatsko you’re gonna get the last one here because it fits your style. The word is and this is from Jay mapes. It is risky. A lot of your pics are risky and I own just about all of them.
Maxx Chatsko: Yeah You know, I think with high risk comes high reward, right? That’s something I came up with. Many people don’t know that, that that’s my phrase. But yeah, and it’s important to there’s different kinds of risks, right? There’s the risks of drug development, obviously, there’s also valuation risks. I’ve tried to avoid those with my recommendations here, and so forth. And then there’s just execution risk from the competitive landscape, regulatory risks and so forth. So important to note those, there’s different types of risks. But yes, I tend to invest in some riskier companies.
Dan Kline: Maxx was also the first person to say with great power comes great responsibility that often gets credited to Spider-man’s uncle, but in fact, it was Maxx.
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