Stop Making Excuses

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

Whatever's keeping you from trying to beat 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. 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."

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 it through Oct. 31, 2008 -- all the while reinvesting dividends -- you'd have achieved a 1.4% 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 that figure:

Company

Yield

Barclays (NYSE: BCS  )

16.70%

Terra Nitrogen (NYSE: TNH  )

13.70%

Otter Tail (Nasdaq: OTTR  )

5.10%

Nokia (NYSE: NOK  )

5.10%

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, has won big by betting on well-positioned growers. Today, he's betting on National Oilwell Varco (NYSE: NOV  ) and Suncor Energy (NYSE: SU  ) .

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

Legendary growth guru Peter Lynch thought 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."

Here's the proof: David Gardner -- a self-professed amateur -- has documented a full decade of 20% returns. Yet David didn't have the opportunity you have today -- an opportunity born of panic, one that has Warren Buffett oversexed for the first time since 1974.

Be a Fool for your portfolio
David, a writer and entrepreneur who never worked a day on Wall Street, shows that those of us who lack the advantages that come with classic financial training are just as capable of beating the market consistently. For further proof, I submit to you 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.
  • 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. She's also the Fool who placed AeroVironment (Nasdaq: AVAV  ) on our scorecard in September, a bright green market-beater in a recent sea of red.
  • 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 owned shares of Nokia, a Motley Fool Inside Value pick, at the time of publication. Otter Tail is a Hidden Gems recommendation. National Oilwell Varco is a Stock Advisor selection. AeroVironment is a Rule Breakers recommendation. The Motley Fool owns shares of SPDRs. Its disclosure policy was last seen leaving Camp 6 in a quest for the summit of Mt. Market.


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