I know I said you shouldn’t pick your own stocks but if you don’t listen to my advise or if you want to do this because you enjoy the thril of it, I wanted to share different techniques I’ve used over the years to build my portfolio. I tend to put some money away in my TFSA, where I’ve accepted the fact I could double my money fairly quickly, or I could lose half of it just as easily.
Get your friends to pick your stocks
Now, that I have your attention, I do not actually mean have your friends pick out the stocks you buy, but rather use them as indicators for trends you can invest in. Being a HENRY you probably spend time with other HENRYs. HENRYs typically purchase items or use services based on the recommendation of other HENRYs. These products tend to either cost more but are worth the price or are “deals” and value focused. HENRYs also tend to be a little bit a head of the masses when it comes to these products. This is typically the key points about this demographic that makes them good for picking stocks.
Small segway
there are visionaries, explorers, settlers, and general population.
This is true for technology, history, life, investing, etc.
You don’t want to be a visionary because they are typically too early and there ideas usually aren’t commercialised enough to buy in to.
You don’t want to be the explorer because they usually die or get killed by the natives(replace by incumbent)
Settlers is where the money is as they get in early but not too early, and most of the risk is gone.
The General population gets there late and misses most of the gains but if it’s a good thing, they usually does make some money.
Another way to say the above is the bleeding edge and cutting edge of technology hurts too much. Wait for adaption from influencers or other HENRYs.
Here is a small test to see if you are a HENRY with HENRY friends and your Spidey senses are worth trusting.
Think back to when you first heard about Chipotles Mexican food. If you brain is thinking of the trendy, Mexican restaurant, we are on the same page. When did you and your friends really start going here a lot?
I remember my first time being when I started my MBA in September 2010. We ended up going There pretty often thanks to one of my friends, and over the course of the three years, we eat there more than I care to say. The stock in September 2010 was worth around $160USD. This was pretty rare for a restaurant franchise to be worth this much and many people thought the stock was going to crash. It’s now worth $353USD and at one point was above $700USD.
Another example, think back to when all your friends started watching a lot of Netflix. I remember this happening once again during my MBA but around September 2011. Netflix was around $11(adjusted for 7-1 stock split) at the time and is now worth $220. Netflix is really interesting because I saw another point of inflection when Netflix started producing really, really good content of its own. I saw this around mid 2016 where most of the things I watched on Netflix were produced by them. They changed from just distributing content to making it. This is a topic all on its own that I will save for another day.
Last example. When did everyone start shopping at Lululemon. I remember my wife shopping there in the mid 2000’s and then I started buying all my hoodies from there around the same time. Until the mid 2010’s, Lulu stock was under $20. Today it’s worth close to $80. I think everyone can remember when it seemed like every woman started walking around in Yoga pants. Being Canadian, I like to think that Lululemon made yoga gear more about lifestyle clothing then being in a yoga studio.
I’m stopping with this stock because if you look at the progression of the stock from then to now, it had many ups and downs. When picking stocks like the above, knowing when to sell them is almost as important and when to pick them up. I typically hold stocks like this until I see mass adaption or I double my money. This is when I typically ask myself, “where else can my money be making me more money.” The exception to this rule is if the company adapts or pivots, thus entering into a new market.
As Kenny Rogers said best
You got to know when to hold’em, know when to fold’em
Thanks for reading and please comment or ask any questions below.
Henry Bill 