Ask the Readers will return in a couple of weeks. In the meantime, brace yourself for a wild ride. I’ll be discussing stock picks, performing a song with Mrs. 1500, telling you why I love Jim Collins’ new book and even giving away prizes.
I don’t like to toot my own horn, but I need to in order to get my point across. I’m one of the most successful stock pickers you don’t know. Here are my greatest hits:
- I bought Google at IPO in 2004 for $85/share (20 bagger!)
- I bought Apple when the iPhone was announced in 2007 (10 bagger!)
- I bought Tesla Motors in the $20s ($215 today)
- I bought Facebook for an average price of $29 ($117 today)
- Chipotle has done very well for us (and we’ve never barfed after a burrito!)
One question I get frequently asked is:
You’ve done well as a stock picker. Shouldn’t you keep your whole portfolio in stocks?
I’ve thought a lot about this question. The main problem with my performance data is that it only goes back to 2004, just 12 years ago. The goal should be to build a portfolio that can stand for decades with little intervention. I’m not sure mine can. It’s difficult to know when an empire has stopped growing and has entered a permanent tail spin:
- Has the iPhone peaked?
- Will Chipotle serve up more E. coli burritos?
- Will Facebook go the way of MySpace?
If you research any of those questions, you’ll see “analysts” on both sides of the fence yelling their opinions. I don’t have a good answer to any of those questions and I don’t know which screaming person to trust, so owning these stocks is a game of chicken. Index funds make up the bulk of my portfolio now.
Awful confession: When I first started this blog, I didn’t know what an index fund was.
Intro to Indexing
I was perusing Mr. Money Mustache back in late 2012. Eventually, I ran into this Jim Collins guest post. I liked Jim’s style, so I went to his site and discovered his Stock Series. It was an epiphany. Sometime in the middle of reading it, I looked out the window and noticed a triple rainbow and unicorns. Even more amazing, my children stopped fighting for 5 minutes.
The Stock Series resonated with me like nothing else I had ever read about investing. I loved the amount of detail that Jim went into. I’m a deeply skeptical person who doesn’t like it when someone tells me to do something just because. I need to know the Why. The nuts and bolts are very important and Jim explained it all. Some of the posts that hit home were:
That last one changed my investing strategy. Up until then, most of my money was either in individual stocks or high-fee funds. One of those funds had an expense ratio of over 2%! Arrrgh!!!
Over the next couple couple of years, I moved a large amount of money to low-fee funds. Vanguard has over $400,000 more in assets thanks to Jim.
Index funds are safe, rational, effective and the right choice for most.
The Simple Path to Wealth
Whenever I’m invited to a high school or college graduation, I give the gift of books. I’ve given away Millionaire Next Door many times. JD Roth’s Your Money: The Missing Manual is another. These are the books that I wish I had read when I was 20. By giving them to young folks, I hope to spur them into making some good decisions before they’re 55 and have only $3,000 saved up. Money invested at the age of 25 is very powerful. At 55, not so much.
I have a new book that I’ll be thrusting into the hands of every young person that I know. It’s The Simple Path to Wealth, based on Jim’s stock series. The beauty of this book is that it’s the only thing one ever has to read about investing. Read it, follow the advice and be done.
No need to read anything else or watch silly screaming people on TV. It’s that simple.
Me and Jimmy C
I’ve had the pleasure of meeting Jim on more than one occasion. He’s a nice guy who I felt instantly at ease with (rare for introverted me) the first time we met. I look forward to seeing Jim again in just a couple days.
Anyway, I consider Jim a friend and I wanted to go above and beyond to help him promote the book.
—>>> Little known fact: Mrs. 1500 and I are folk artists.
At FinCon, Mrs. 1500 and I will be performing Me and Jimmy C* (sung to the tune of Janis Joplin’s, Me and Bobby McGee). I’m not going to let the entire cat out of the bag today, but here is a sneak peak of the chorus (sing along!):
Stock pickin’s just another word for money you’re gonna lose,
And life, don’t mean nothin’ if you ain’t free, no no,
Feelin’ good was easy, when my stocks went to new highs,
You know, that feelin’ wasn’t good enough for me,
So I learned index investing from Jimmy C.
I’ll be seeing Jimmy C at the end of the week. He is going to autograph two books which I’ll give away. All you have to do is come up with a limerick or haiku about Jim. Hell, if you want to be goofy like us, rewrite a verse of a song, any song.
That’s it. Make it fun. The two best entries will get a copy of The Simple Path to Wealth. Leave your entry in the comments section.
More Jimmy C
Finally, if you haven’t overdosed on Jimmy C yet, I interviewed Jim in a massive, three part series.
- Part 1: Learn more about FU money and Jim’s hate mail!
- Part 2: The Jim Collins Beanie Baby! Maybe…
- Part 3: Learn about Jim’s Triumph was actually a massive failure.
*(Mrs. 1500 note: Obviously a big fat lie if you’ve heard that recording…)
Mr. 1500 rebuttal: Start warming up those vocal cords lovely wife. Your singing can’t be any worse than my guitar playing.
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