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Date: 6/11/2005 9:35:46 AM ( 16 y ) ... viewed 1293 times
Let's Hear It for Joe Oddlot
You're bombarded with ads on TV, radio, and even the Internet that say you can't be a superior investor. You need an MBA. You need to have been on Wall Street. You're just another Joe Oddlot. You can't possibly beat the market, right? Balderdash.
By Tim Beyers (TMF Mile High)
June 3, 2005
"You are clearly an odd lotter."
That was the subject line of the email. And I knew it was hate mail before I opened it. Allow me to explain. You see, you buy an "odd lot" any time you purchase less than 100 shares. It's "odd" because back in the bad old days of Wall Street, investors would have a hard time purchasing stock in anything but increments of 100. An "odd lotter," then, must be -- gasp! -- an individual investor who picks up shares when and where he can. And you can bet that no one other than a Wall Street pro would call you out as an "odd lotter."
That's almost exactly the way it went down. The reader was indeed a pro who wanted to get in a few digs, but he also had a legitimate bone to pick. He was writing to chastise me for a theory I failed to confirm in covering the big move in shares of Akamai Technologies (Nasdaq: AKAM) last week.
I'll admit: I wasn't exactly contrite about my omission, which is probably why a somewhat spirited exchange was soon to follow. But my neck hair didn't stand on end until my Wise digital nemesis (let's call him "George") wrote: "I always love the proclaimed self-made investor -- lol I am sure you have done great."
George then went on about how he had earned his MBA and received formal financial training. And that's when I figured it out: George was from the don't-do-it-yourself crowd. Perched in the ivory tower of good returns over the years, he had tagged me as another Joe Oddlot -- insufficient to manage my own portfolio, let alone write about picking stocks. How could I be qualified, he argued, if I didn't have a lick of Street experience?
It's a fair question, and it deserves an answer. I'll let Peter Lynch do the talking: "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." That's from his classic work for common investors, One Up on Wall Street.
I take heart in knowing that the money manager who guided Fidelity Magellan to better than 25% annual returns during his tenure thinks Joe Oddlot can manage his own money at least as well as our friend George Wallstreet. The secret? Buy stock in companies you know and will follow joyfully. No Street experience required. But don't take Lynch's word for it. Let's instead meet three Foolish "odd lotters" who have done quite well for themselves -- and for many of you in Fooldom.
The boss also happens to be one of those self-made investors that George ridiculed. Perhaps that's why he called him out, too, in his note to me. George said it's crazy for us to bill a guy who graduated with honors in English and creative writing as a top-notch investment analyst. Well, Tom's no good at karaoke, but he happens to be one heck of a stock picker. His focus on unloved and underfollowed small-cap stocks has delivered generous returns for subscribers of Motley Fool Hidden Gems and Motley Fool Stock Advisor. How generous? Have a look for yourself:
Return Return vs. S&P 500
Tom's top Hidden Gems pick: Middleby (Nasdaq: MIDD) 192% 177%
All Tom's Hidden Gems picks 28% 20%
Tom's top Stock Advisor pick: Quality Systems (Nasdaq: QSII) 412% 368%
All Tom's Stock Advisor picks 58% 42%
The other boss, like his brother, has no formal Wall Street training. Instead, he's translated his passion for the next big thing into a winning stock-picking strategy. Most of his best stock picks have been repeated over and over here, so I won't review them again -- unless you beg. No, really, I won't. Stop asking!
Just look at David's market-trouncing Motley Fool Stock Advisor returns, and the start he's getting in our newest growth service, Motley Fool Rule Breakers, for which he acts as the lead analyst:
Total Return Return vs. S&P 500
David's top Rule Breakers pick: Archipelago Holdings (NYSE: AX) 70%
All David's Rule Breakers picks 0% (3.3%)
David's top Stock Advisor pick: Marvel (NYSE: MVL) 540% 525%
All David's Stock Advisor picks 53% 37%
The market has yet to recognize the high-growth promise of David's Rule Breakers picks. And that's OK. Given his performance from the days of the old Rule Breaker portfolio, there's every reason to believe his current crop of rebels will be trouncing the market before long.
A former ship's captain and captain of industry, Philip -- known as the Admiral -- is our resident value investing guru. His investing prowess was formed over decades, but he's also honed his trade as a Fool contributor (as one of the pioneers of our Foolish Collective stock-picking discussion board). What has sidestepping the Street done for Philip? It's put him in good shape, I'd say. Take a look at his returns for Motley Fool Inside Value subscribers:
Total Return Return vs. S&P 500
Philip's top Inside Value pick: First American (NYSE: FAF) 38% 30%
All Philip's Inside Value picks: 10% 7%
Consider me the cook's assistant on a ship of Fools. Like the others, my investor education has taken place far away from Wall Street, except I carry the distinction of having been $45,000 in debt at one point. Fortunately, that's no longer the case, and now my returns are, well, pretty decent. I can't mention all of my stock picks because I recently bought more of one of my existing positions (find out what I own here). The two I can mention are Akamai and Barnes & Noble (NYSE: BKS). Akamai has done OK, but a trading mistake cost me big-time, and so my total position is up just less than 6%, vs. a 10% gain for the S&P. Barnes & Noble, on the other hand, has been a huge winner, rising 53% in just under a year vs. 6% for the S&P 500 over the same period. Not bad, eh?
Three cheers for Joe
No doubt there are many of you out there who still believe that Joe Oddlot has no shot in a world where George Wallstreet and his cronies drive BMWs, own big houses, and golf at the club.
But remember what Peter Lynch said: You already have the tools to earn above-average returns from stocks. Here at The Motley Fool, we're living proof of that. Many of us have walloped the market with exactly zero training from any bank or brokerage. Don't buy Wall Street's fear mongering; learn to buy stocks instead.
What kind of investor are you? Hidden Gems, Rule Breakers, and Inside Value are yours for the taking. Join our Foolish ship of odd lotters by trying our newsletters for 30 days -- without paying a dime. There is no obligation to subscribe.
Fool contributor Tim Beyers would think Joe Oddlot is a true American hero, except that, uh, he's imaginary. Aw, what the heck. Tim owns shares of Barnes & Noble and Akamai, which was a recent Rule Breakers recommendation. To see what other stocks are in Tim's portfolio, check out his Fool profile. The Motley Fool has a strict disclosure policy.
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