How My Stock Picks Beat the Market
How and why my barbell strategy for investing has paid off
My individual investments beat the market in the last few months.
I previously talked about how I managed to grow my investment portfolio to over $1M+ through a barbell strategy for allocating my assets across the risk spectrum. In short, it involves investing most of my money into low-cost index funds like ETFs, but reserving some funds for individual stock picks that pass my “10x10” rule.
Here is how that strategy has helped me outperform the index returns.
Being A Data-Driven Investor
It’s hard to manage anything - fitness, health, or even investing your money - if you don’t have a way to measure and track key performance indicators. Manually updating Excel templates is a poor way of doing it.
That’s why I use my own app, Peek to track my portfolio and performance. From Peek, I could see that my individual stock picks did 11.6% over the last few months, whereas ETFs did 7.3%.
Put simply, my barbell strategy has delivered $13,000 in higher returns, versus a portfolio that was invested 100% in ETFs.
ETFs
Individual stocks
Being data-driven does not mean needing 4 screens charting the price action of various markets, and a Bloomberg terminal.
Unless you work at an asset management firm, your goal should be to track your performance consistently to get data points around how your investments are performing - especially for individual stock picks (e.g., GOOGL, PLTR, TSLA).
Knowing how your portfolio is performing, also means you can learn from whether market movements support, or invalidate your original hypotheses around certain investments.
How the Barbell Strategy is Paying Off
Within my equities investments, I still have 60% invested in ETFs with the rest being bets on individual stocks. This allows me to take calculated risks, while preserving my overall portfolio from potentially volatile asset classes, or higher-risk bets.
I personally enjoy a more active approach to investing, and want to see where I could squeeze a bit of alpha without taking on excess risk.
I love doing research about different sectors to better understand the fundamentals of that business to identify 10x10 opportunities: picks that I think can deliver 10x returns over 10 years. That’s how I built conviction around my bet for Palantir, which has now grown more than 70% since I bought my position.
It’s worth noting that a more active strategy like mine is not suited for everyone. The tradeoff is that my portfolio returns are going to be more volatile over time compared with someone who’s tracking the index by being 100% invested in ETFs alone.
Here are the ones that did well
TSLA: +18% since July
PLTR: +55% since July
Here are the ones that didn’t do well
GOOGL: -10% since July
AMZN: -7%
In summary, investing for the long run does not have to mean a purely passive strategy that tracks the market. Depending on your investing style, you may prefer a more active approach to deploying your money into sectors of the economy that you find more interesting.
But regardless of how you approach the markets, monitoring how your portfolio is doing is key to investing better.
If you’re interested in learning more about the AI-powered personal CFO I’m building, visit: https://peek.money/