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Stop Making Excuses

Talk about a callous headline. Stop making excuses? Mr. Market has turned psychotic so that most portfolios look like Janet Leigh after the shower scene in Psycho: bloody and full of holes. And yet here am I telling you to throw away the crutch?

Go ahead, get your glass of water for a proper spit take. I don't mind.

Truth is, we're already in a recession and no one knows exactly how bad it will get. But ask yourself: Would you rather try to outrun a limping market, or a galloping one? The former, of course. Which means now is the time; no more excuses.

An accomplished amateur
Go after the market for the same reason that dozens of explorers have risked everything to reach the summit of Everest. As British explorer George Leigh Mallory explained before his 1924 try for the top of the planet, a journey from which he would never return: "Because it's there."

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 the SPDRs S&P 500 exchange-traded fund on Jan. 2, 1998 and held through Nov. 28, 2008 -- all the while reinvesting dividends -- you'd have achieved a 0.7% annual return over the ensuing decade. Could you have beaten 1% returns?

Unquestionably. Consider dividends. Each of the following stocks have dividend yields -- separate from returns -- that substantially exceed 5%:



Aluminum Corp. of China (NYSE: ACH  )


Value Line (Nasdaq: VALU  )


Wells Fargo (NYSE: WFC  )


Rio Tinto (NYSE: RTP  )


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

You could also have bet on a superior stock picker. Some of America's top growth fund managers have sustained 10% or better annual returns for more than a decade -- Ken Heebner, for example. He's won big by betting on winners in well-positioned industries. Today, he's betting on Peabody Energy (NYSE: BTU  ) and Tenaris (NYSE: TS  ) .

But Heebner is a pro. An expert. Could an "accomplished amateur" achieve similar returns?

Absolutely. David Gardner -- a self-professed amateur -- has documented a full decade of 20% returns. Yet he didn't have the opportunity you have today; an opportunity that has Warren Buffett oversexed for the first time since 1974.

Be a Fool for your portfolio
David's track record shows that it's possible to beat the market consistently without the advantages that come with classic financial training. But he's not the only one. Witness the remaining roster of the market-beating Motley Fool Rule Breakers team.

  • 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. He's also the Fool who added Chinese search star (Nasdaq: BIDU  ) to our rebellious roster two years ago. The stock has since trounced the market.
  • Karl Thiel is an English major who worked for a small biotech fund before finding the Fool.
  • Sarah Goddard is a trained hydrology and hydraulics engineer who possesses an uncommon knack for understanding market dynamics.
  • 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 Fools. We're business-focused investors who study and invest in firms bringing disruptive changes to the 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. Take a free trial and get 30 days of access to our research and recommendations at Rule Breakers, and we'll try to reach the summit together.

This article was originally published on June 7, 2008. It has been updated.

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. Value Line is a Stock Advisor selection. Baidu is a Rule Breakers recommendation. The Motley Fool's disclosure policy was last seen leaving Camp 6 in a quest for the summit of Mt. Market.

Read/Post Comments (2) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 03, 2008, at 5:17 PM, dkagey wrote:

    I would tred carefully on "Fool" advice. I paid good money to join their "Ready Made Retirement" recomendations opportunity. I followed their plan $100k is now down to $54k...a 46% loss. With help like that, I will be able to retire at 80!. The funds I sold to buy into this are down, but only 26%. I am staying with these investments...but more out of curosity. Their site blog says they are still good.

    Good luck in tough times

    Dave K

  • Report this Comment On December 04, 2008, at 10:00 AM, SteveTheInvestor wrote:

    A "limping" market?? That's a nice, optimistic way to phrase it. It's more like the market has been beaten for hours with baseball bats and left for dead. For good measure, the market might just be fitted with cement shoes and thrown in the ocean.

    I'm not making excuses. I simply don't find anything to like about the current market. I don't call most of these stocks cheap. To call them cheap is living in the past. You know, back when consumers were living in a fantasy world of easy credit and corporations were reporting fantasy assets.

    I've gotten out of many of the stocks that more than one person here was touting. For the last year, this has proven to be a very wise move indeed. On my stupid side, I also held some of them (bad move).

    And as for a "documented" decade of 20% returns, that too is history. Rule Breakers (just looked) is actually under-performing the S&P slightly. Ah yes, the S&P (stands for Sad and Pathetic) returns absolutely stink. Perhaps we should stop comparing your portfolios to it and just worry about whether or not we are actually making money in any of these portfolios. At this point, it would appear that the answer is NO.

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