Recently I was catching up with a friend (let’s call him Quentin) and he mentioned that he was investing in stocks. I got curious and asked more, and he said he ‘put a little bit here and there, some in crypto also’. I shared that I was looking mostly at blue chip companies, ETFs and investing for the long term, and he told me it was boring. And I agree with him.
There are many investing styles out there, and you can choose the type you want. The boring style fits my personality better, whereas for Quentin, the exciting style suits him. Different strokes for different folks.
My boring style of investing would (ideally) give a stable year-on-year returns and dividends. They would not be 10x multi-baggers, but churn out a constant stream of cash flows. On the other hand, the exciting style would have higher risk, with potential for the stocks to be multi-baggers. However, there is also a higher risk of the stock going sideways or downwards for years.
Note that the strategies are on a continuum; some blue-chip stocks are riskier than others, but provide higher potential returns. You can also allocate different proportions of your portfolio to each strategy.
Turtle or Boring Way
The main reason I choose the boring way is simple. It is low maintenance, yet provides decent returns. This frees up time as you do not have to constantly monitor your investment.
If you invest in ETFs, all you have to do is to find a fund that tracks the index well and has a low fee. If you want to go deeper, you can look at how they track the fund, where/how the assets are stored (if any), etc. After that, just dollar cost average into it, or set up an alert to buy when some technical indicator is hit. That’s it.
If you invest in stocks, the method is similar, but there is more homework to do. You have to look into the fundamentals of the company, be satisfied with it, then also find a good price to buy it at. Since this is an individual company, you have to check back occasionally and make sure nothing is fundamentally wrong with the company. This maintenance part can grow out of control if your portfolio has many stocks in it. However, since I invest in blue chips, this is kept to a minimum as they are scrutinised by the market.
I’m glad that I had this conversation with Quentin, as it has revealed to me another dimension of investing: personality.