How To Be An Investing Genius – Forbes

When the stock market hit a recent low last week, my college-age daughter who is new to investing (thanks to the Robin Hood app) asked me what stocks I would recommend. She already knows that dips are buying opportunities, and she should buy low, sell high. After dismissing my suggestion that she consider buying an S&P 500 fund (“too boring,” she told me. “That’s the point!” I told her), I suggested two stocks: Netflix and Apple. She bought them immediately.

Apple announced impressive earnings Thursday. The stock has increased nearly 10% in the two trading days since.

Netflix, which had cratered 36% over the past several weeks, down this year from a high of $700.99 to a low of $351.46, shot up more than 11% on Monday.

My daughter told me that all of her friends now consider me a stock-picking genius. I laughed. I’m hardly that. But I have had some success over the years in investments by applying my most salient personal traits to my investment life: I’m cheap, lazy, and boring. If you apply these three traits to buying stocks, you’ll be surprised how well you’ll do.

Netflix is a great example. I have long wanted to own Netflix, ever since I noticed my 80-year-old mother figuring out how to stick with the brand as it moved from shipping DVDs to streaming. A brand has to be powerful to get someone as technically illiterate as my mom to use their technology. But, since I’m lazy, I never picked up the phone, called my broker, and ordered it.

Yes. I still call my broker when I want to buy a stock. You’d be surprised how that small barrier to entry, both the fee and the action of picking up the phone, keeps you from buying stupid stuff that you shouldn’t even consider. Hello—Gamestop?

But, as I mentioned, I was too lazy, so I watched from the sidelines and Netflix took over streaming and, during the pandemic, essentially the world. The stock skyrocketed. But when COVID-19 mutated from pandemic to endemic, which meant that we’d need to start venturing away from our couches at some point, subscriptions slowed, profits dipped, Wall Street freaked out and the stock plunged. I finally had the incentive I needed to add the stock to my portfolio. I called my broker and bought.

I don’t really care if Netflix stock rises anytime soon. I just know the brand has value. I’ve noticed that when I help my kids or in-laws set up their smart TVs, the first thing they want to know is how to sign in to Netflix. They ask that the Netflix tile be placed first on their home screen, usually followed by HBO Max.

No one ever says “Hulu and chill,” and even if they did, Hulu is owned by Disney and Comcast, so you can’t invest directly.

I’m so lazy that it took a crash for me to buy Netflix. And because I’m cheap, I felt pretty confident about the purchase. I essentially got a share and a half for the price of one. I have no idea if Netflix will figure out the challenge of slowing subscriptions. I don’t have intimate knowledge of the company’s balance sheet. But I took a quick look at the price to earnings ratio—down to nearly 30 at the time I purchased, which is about all the due diligence I ever do, and that was good enough for me. 

Now I’ll apply the third attribute to my “cheap, lazy and boring” investment strategy and hold the stock forever. Being boring is probably the most important part of successful long-term investing. Buying and holding a stock that you’ve vetted is a superpower. You don’t have to think about it at all. When it goes up a lot, you momentarily feel like a genius. When it plunges, you feel a little less smart, but you might also get the kick you need to buy more.

You don’t need to worry about how your portfolio does day to day because you were too lazy to buy stocks you didn’t believe in. 

Being cheap, lazy, and boring allows you to make some extraordinary investments. I bought Amazon stock in the 1990s because I was tired of my friends who worked there (I live in Seattle) bragging about how rich they were going to be one day. Trying to shut up your friends isn’t the best method for buying a stock, but because I’m boring, I held on to the stock ever since, which now makes me an investing genius. Meanwhile, my friends left the company long before their options vested because it was not a very fun place to work.

If I ever buy crypto, it will be for a similar reason, to get my friends to stop bragging about their genius investments and to just get them to shut up. But right now, I’m too lazy. 

I’m sure Apple and Netflix will come back down to earth in the near future. That’s fine. They’re great brands with strong management that have impressive track records. I’m not too worried about their long-term prospects. Besides, I’m too cheap, lazy, and boring to do anything about it even if I wanted to. But in the meantime, for a few days anyway, I’ll take the moniker of investment genius. After all, I’ve earned it.

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