4 contrarian investment ideas that changed my life

These are a set of guiding principles that I feel have helped me become a better investor. This isn’t financial advice…

1. Don’t diversify.

If you feel like you have an edge in a particular space and you have long term conviction in that space, invent in that space and that space only.

For me, this is tech stocks and will eventually be crypto. I’ve been working in and around tech for 10+ years and have an insider edge. I have knowledge of where new technologies will develop from and how the markets will shift in the next 5–10 years.

If you have a strong conviction about a particular asset within crypto and or equities then, diversification within that asset class should be enough. Index and ETFs are okay.

2. Invest in themes then look at fundamentals.

Market themes > security analysis and fundamental analysis.

An example would be to invest in a range of semiconductor companies and hold for 10 years minimum. Knowing that as more physical items become electrified and eventually come online (IoT) more chips will be needed to satisfy the exponential increase in demand.

Things we take for granted like fridges, coffee machines, speakers and all electronic devices will eventually require a chip and eventually more sophisticated chips as they come online.

Another “theme” could be the shift towards battery power. Where it would make sense to look at leading lithium battery manufacturers.

Saying this though please don’t ignore the fundamentals:

• I don’t invest in companies that aren’t profitable. Please look at revenue growth and net income carefully.
• Look at their balance sheet. Asset to liability ratio of over 0.7 raises some flags. Below 0.4 is considered “healthy”.
• Do they have good free POSITIVE cash flow?
• How do they compare to other companies in the same space? Have they priced accordingly on a revenue adjusted basis?
• Little or no real market competition? Fantastic they will continue to enjoy monopoly profits for years. Google / Microsoft / Shopify.

3. The hardest part of investing isn’t finding good companies. It’s being patient enough to hold a single investment for 10–20 years or more.

As Warren Buffet says you want to be holding stocks that you would be okay holding if the market were to shut for 5 years. In other you want to pick stocks that you’d be okay holding for 5+ years.

4. Invest all of your income.

Not some. Not part of it, but all of it. For 2 key reasons:

-Beat inflation. Anything sitting in the bank as cash is losing value every day.

-It will force you to live well below your means and to save more.