The One Investing Lesson that Changed My Life
Matthew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.”
-George Bernard Shaw
They are trying to kill you. Maybe not your body, nor even your eternal soul but they are trying to take your life right from you. They do it subtly, paycheck by paycheck as you give them a little piece of your financial future to safeguard and protect. Unbeknownst to you, each piece you give to them is akin to another drop of blood that is now unable to be replenished.
We thought we were setting ourselves up for a better life, a life one day independent from financial worry. They however seemed to be selling us a bill of goods, and we bought it. We bought their mutual funds, exchange trade funds and annuities and in return we got sub-par performance, high fees and complexity. We were too reasonable and we adapted to the world as it was presented to us.
In so doing we lost our financial future as we underinvested and underperformed. Who can really blame us for adapting to live in a world of dot.com busts followed by housing bubbles on the heels of financial crises with flash crashes and criminal schemes? They were only looking out for one person and unfortunately that one person is not you.
We’ve been reasonable for far too long, it is time to make the world of investing work for us and not against us. They say that buy and hold is dead and maybe that is exactly what they want us to believe. However if you can identify a great business and get it for a fair price you’d be surprised at how alive it can be.
Take a brand like Whole Foods (NASDAQ: WFM), one that’s outperformed the market by more than ten times over the past six years. They’ve developed a brand around the importance of food in its purest form and leveraged that into a business model that produces twice the profitability and returns as their more commoditized peers.
Or keeping with the food with integrity theme, Chipotle (NYSE: CMG), up over 600% over the past six years. They’ve built a culture and a brand that’s resonated with customers. They’ve built a business upon the unreasonable idea that better food is actually making progress. Even more an unreasonable concept, by focusing on what’s better for their customers to consume, both Chipotle and Whole Foods have produced better returns for their investors.
If there is one lesson I’ve learned that’s changed my life it is that by investing in highly unreasonable companies I’ve taken control of my financial destiny. Take buying a robotic surgical company before it became a household name. It’s quite unreasonable to be buying Intuitive Surgical (NASDAQ: ISRG) at a valuation just as lofty as their goals of revolutionizing the way surgery is traditionally done. Yet the company was armed with the patents and regulatory approvals necessary to bring disruptive progress to an industry that so desperately needed it.
But it cannot be understated that for every Whole Foods and Chipotle there is a volatile roller-coaster like Green Mountain (NASDAQ: GMCR). In trying to bring convenience and richly flavored satisfaction to every cup, they might lack the same managerial integrity or the ability to build a strong moat around their business. Buying at the wrong time or wrong allocation can cause much angst, but progress isn’t a walk in the park.
While we cheer the unprecedented blend of science and technology brought to modern science by Intuitive Surgical, sometimes that same blend just doesn’t create the same recipe for success in a MAKO Surgical (NASDAQ: MAKO). This while taking on the unreasonable task of bringing a fast recovering alternative procedure to the replacement of knees and hips has as of yet not led to financial rewards. Being on the unreasonable path will cause a bruised knee or two, but again if progress were meant to be easy everyone would be on the same path.
So, my advice to you is to stop being so reasonable and return their bill of goods. Take a risk and break some rules by taking control of your financial destiny. It is a most unreasonable undertaking but progress toward your financial goals depends on it. If you need help getting started on this most unreasonable course, get some advice you can trust by joining a community filled with those who’ve taken the first steps toward a life filled with progress. Be unreasonable, take back your life.
latimerburned owns shares of Intuitive Surgical, MAKO Surgical, Chipotle Mexican Grill, and Green Mountain Coffee Roasters and has an options position on Green Mountain Coffee Roasters. The Motley Fool owns shares of Chipotle Mexican Grill, Intuitive Surgical, MAKO Surgical , and Whole Foods Market and has the following options: long DEC 2012 $16.00 puts on Green Mountain Coffee Roasters and short DEC 2012 $21.00 calls on Green Mountain Coffee Roasters. Motley Fool newsletter services recommend Chipotle Mexican Grill, Green Mountain Coffee Roasters, Intuitive Surgical, MAKO Surgical , and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.