Stop Making Excuses

What's your excuse? Bad advice? A poor economy? No time?

Whatever's keeping you from beating the market as an investor, it's time to throw away the crutch. No more excuses. Go after the market for the same reason that dozens of explorers have risked everything to reach the summit of Everest.

Why? As British explorer George Leigh Mallory famously said, before the 1924 try at Everest from which he would never return, "Because it's there."

An accomplished amateur
We've all heard that quote, in some form or another, for years. Here's one that may have escaped you: "I've never considered myself a professional, but rather an accomplished amateur."

Would you believe that's the self-portrait of recently deceased pioneer Sir Edmund Hillary? With his Sherpa guide, Tenzing Norgay, he successfully reached the apex of the world in May 1953, and then the South Pole five years later. Yet he considered himself an amateur.

How remarkable. If Hillary could summit Everest or conquer the Antarctic as an "accomplished amateur," surely you -- an amateur investor -- have no excuse for failing to beat the market.

Be an accomplished investor
Let's put this into perspective. Had you bought a SPDR S&P 500 exchange-traded fund on Jan. 2, 1998 and held through April 30, 2008 -- all the while reinvesting dividends -- you'd have achieved 4.9% average annual returns over the ensuing decade. So could you have beaten 5% returns?

Well, sure. Just as one example, each of the following stocks have dividend yields -- separate from returns -- that substantially exceed 5%:

Company

Yield

CapitalSource (NYSE:CSE)

15.20%

Apollo Investment (NASDAQ:AINV)

11.50%

Diana Shipping (NYSE:DSX)

10.2%

Golar LNG (NASDAQ:GLNG)

5.50%

Sources: Yahoo! Finance, Capital IQ, CAPS screener.

As another example, some of America's top growth fund managers have sustained 10% annual returns over 10 years -- Ken Heebner and Ron Baron, for example. They've won big by betting on well-positioned growers. Recent buys include Transocean (NYSE: RIG  ) and Under Armour (NYSE: UA  ) .

But these stock pickers are pros. Experts. Could an "accomplished amateur" achieve similar returns?

Legendary growth guru Peter Lynch thinks so. In One Up on Wall Street, he wrote, "Twenty years in this business convinces me that any normal person using the customary three percent of the brain can pick stocks just as well, if not better, than the average Wall Street expert."

And the proof is in the pudding. Fool co-founder David Gardner -- a self-professed amateur -- has documented 10-year average annual returns of 20%.

Be a Fool for your portfolio
David, a writer and entrepreneur who never worked a day on Wall Street, is proof that amateurs -- people who don't enjoy the advantage of classic financial training -- can beat the market. So, I dare say, is the entire team at Motley Fool Rule Breakers.

  • Charly Travers studied the molecular mysteries of cancer cells before turning his microscope on biotech stocks.
  • Rick Munarriz is a musician with an MBA and a keen sense of consumer trends and tech.
  • Karl Thiel is an English major who worked for a small biotech fund before finding the Fool. He's also the analyst who uncovered Millennium Pharmaceuticals (Nasdaq: MLNM  ) for Rule Breakers subscribers in 2005. The stock has more than doubled since.
  • And then there's yours truly, who was in the PR business for 13 years -- a job that required intense study of tech industries and business models -- before the Fool made it possible to scratch together a living writing about stocks.

In simpler terms: We're not purely numbers guys. We're business-focused investors who study and invest in companies bringing disruptive changes to industries we know intimately.

I believe that you can and should invest similarly. That you should strive to be an "accomplished amateur" who, like Sir Edmund, quests for the stock market summit because the quest is exhilarating and the rewards incalculable.

Perhaps your excuse is that, in investing, you've had no guide, or didn't know where to start. Let that be true no longer. Click here to get 30 days of free access to our research and recommendations at Rule Breakers, and we'll try to reach the summit together.

Fool contributor and Rule Breakers team member Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Apollo Investment and CapitalSource are Income Investor recommendations. Apollo is also a pick of the Motley Fool Hidden Gems Pay Dirt service. Under Armour is a Rule Breakers recommendation. The Motley Fool owns shares of CapitalSource, Under Armour, and Standard & Poor's Depositary Receipts. Its disclosure policy was last seen leaving Camp 6 in a quest for the summit of Mt. Market.


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  • Report this Comment On June 07, 2008, at 3:21 PM, JTW75 wrote:

    If your newsletter were free, you would be considered an "amateur." But since you & your team make considerable money on it, you are a professional, analagous to athletics. I enjoy & respect the Motley Fool, but was taken aback a bit about the misleading prose of being an "amateur."

  • Report this Comment On June 09, 2008, at 6:03 AM, rbenjie1 wrote:

    How's my Million dollar portfolio doing!

  • Report this Comment On June 10, 2008, at 10:33 AM, OPortifoy wrote:

    I bought DSX in January @ $25 and am up 28.96% so far not including the dividend. It's up enough for me to sweat the occasional drop so I'm sticking with it.

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