The opposite of what people tell you is almost always true.
Two of my best stock return investments for 2020 were, GM (General Motors) and F (Ford Motor Company). GM is up 110% on the year and Ford is up 90%. So I bought both stocks at $4.43 Ford, now $8.33, and GM at $19.29, and the close as of this blog update (11/11/20) at $40.33. So who would have thought that buying into our two largest car companies could bring a breakneck return? Because these two old car companies during the worst pandemic are my best buy. The opposite of what stock market analysts said is true.
Same for my other FANG stocks (Facebook, Amazon, Apple, Netflix, Google) except for Netflix. Amazon probably had better content because overall a better deal for customers. The only addition I made was Alibaba and Microsoft. Clearly out and out winners with over a 50% return YTD based on my purchase price at the time.
What does this tell us about investing?
Listen to ourselves and forget what the pundits and gurus have to say. Warren Buffets “be greedy when others are fearful and fearful when others are greedy”. This means the opposite of what most people do.
Take the opposite view
California is now on the chopping block with guys like Joe Rogan, Elon Musk, Ben Shapiro, and others saying they are leaving because the state has a bad government. California has high taxes, and bad management but leaving the golden state? I say do the opposite and stick around.
In 1985 everyone said the computer industry was a service industry and that software and hardware would make people millionaires overnight. I took the opposite approach and saw computers as a commodity like oil or potatoes. So I made millions talking the opposite view.
Be confident in the fact this would happen I left my $160,000 a year job and jumped right into the game buying up manufacturers like Kaypro Computer, Televideo, and Eagle Computer. So in my first month, my income of over $67,000, my second month $87,000, and the third month into the six figures.
Do the opposite of what people were telling me. as of right and made millions because I was willing to have the courage of my conviction and jumped in with both feet and took action. I didn’t sit around dreaming about it, I just said, this is an opportunity I have to take.
Too often people sit back and go along with the crowd. In the stock market, they call it the herd mentality. Because the herd follows the leader and ends up going over the cliff. Don’t listen to what people have to say, think about the situation. Decide whether what people are saying makes sense. Most people tell you things based on a belief system they heard from someone else and carried that belief right over the cliff.
When you see an opportunity, look at the numbers. Make a calculated estimate of the outcome based on the facts. Take action and make that move today. The worst that can happen is you’ll have learned more about what you thought was true. At least you will have made decisions based on what you think which is almost always the opposite of what others are saying.
Mike Addis, Carlsbad California all rights reserved.