I'm an adrenaline junkie. I'm a former hockey player who loves mountain biking and roller blading. I'd prefer a root canal to a plodding round of golf. This search for excitement is a way of life that carries over to my investment portfolio. No stodgy old companies for me. While I know there's a place for them in most peoples' portfolios, they just don't fit my personality. I am a growth-oriented Rule Breakers investor all the way.
But what exactly is our investment style at Rule Breakers? Just because we're looking for growth, do we have to act like day traders? Are we looking for fast and easy money? Do we move in and out of stocks, jumping from one hot company du jour to another, up one day and stung the next?
Absolutely not.
Yes, we are looking for fast-growing, emerging companies that we believe will come to dominate their industries, or even sprout up new ones. Yes, this is a risky style of investing. But we're not trying to make a quick buck from high-flying companies and then move on. You see, we'd rather forego that buck today and collect a few thousand more tomorrow by figuring out which high-fliers are heading for a Daedalus-type crash and which are preparing for a moon shot.
Growth over time
Plain and simple, we are long-term business owners. In fact, we at Rule Breakers are probably the most patient investors at The Motley Fool -- not the value investors, not the dividend mavens, but us growth junkies. When we pick a company like Taser (NASDAQ:TASR), it is not to try and trade on the market's manic short-term fluctuations, but to be a part-owner of a business that has significant advantages over inept competitors. Even though our Taser recommendation is down over 60%, we believe that investing in companies that have a virtual monopoly in their niche is an investment approach that will trounce the market over long periods of time. And we're just as patient with a company like Vertex Pharmaceuticals (NASDAQ:VRTX) that is up more than 50% in just a few months.
There's a reason we prefer this big-picture focus. It takes time for greatness to materialize. Rome wasn't built in a day; neither were dominant companies like Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY). It took years for these companies to establish their competitive positions and become entrenched market leaders. The only consistent way to get multi-bagger returns investing in companies like these is if you are willing to be patient and let it happen.
Let's take biotech companies as another example. We've recommended several of them. CV Therapeutics (NASDAQ:CVTX) is up 39% since it was picked. That company, just like Vertex, has provided great short-term returns, but in this industry, you can't always count on things happening quickly. Drug development is an excruciatingly long process. It can take five years or more from the time a drug begins to look interesting in clinical trials until it actually launches and begins to generate revenue. It is one thing to be an astute investor and find these drugs early. It's another to have the patience and discipline to ride out the lengthy clinical trials to get the most return out of your investment dollar.
You are the owner
The best advice I can give investors is to think like a business owner. When you buy your shares, imagine that you are the CEO's boss and that you need to oversee how he is running your company.
As the boss, how are you going to measure the performance of the CEO? By watching the company's stock ticker every day, or by assessing how the company is progressing toward meeting its long-term objectives?
Good business owners should not care about the short-term fluctuations of their company's stock. That is largely out of their control and nothing more than a distraction from the real mission: increasing the long-term value of the business.
That is why at Rule Breakers we take such a long-term approach to our investing. As shareholders, we are the owners of the companies in which we invest. Though we are certainly happy when a company's stock makes a run, we are even more thrilled when we see clear signs that the company is becoming dominant in its niche. We will hold that company as long as it continues to thrive.
You are not an ostrich
So don't stick your head in the sand. Rule Breaker investments are buy-and-hold, not buy-and-forget. Biotech, nanotech, and cutting-edge consumer brands are highly dynamic industries that need to be watched. While we want to hold these companies for years, we can only do so if management is doing its job and maintaining the company's competitive advantages. Though we are patient investors, we firmly believe in keeping a diligent watch over our companies and pulling up stakes if we don't like what we see.
Investing in Rule Breakers is as much a lifestyle choice as an investment strategy. You need to be able to be patient while these companies grow, but also be a bit of a risk taker. I'm not talking about building an investment portfolio that will scare you. For most of you, it's probably more about being willing to take on a little more risk in a small segment of your portfolio in order to snag some extra returns. If you're up for the ride -- and patient enough to reap the rewards -- then I'd like to invite you to take a free, no-obligation 30-day trial to Rule Breakers. Do it for the adrenaline junkie in you.
Taser, Vertex, and CV Pharmaceuticals are Motley Fool Rule Breakers picks. Amazon and eBay are Motley Fool Stock Advisor picks.
Charly Travers does not own shares of any company mentioned in this article. The Motley Fool has an ironclad disclosure policy.
