“Zig when everyone else zags.” – What does it mean to be “Bohemian” in your investment strategy? [Wednesdays: The Independent Investor]
Miles Everson’s Business Builder Daily speaks to the heart of what great marketers, business leaders, and other professionals need to succeed in advertising, communications, managing their investments, career strategy, and more.
A Note from Miles Everson:
We’re excited to share a great coaching comment and investing tip with you today.
Each Wednesday, we share our insights about various investing strategies and disciplines to help you grow your investment portfolio. In this article, we’ll talk about the importance of doing things quite DIFFERENTLY.
Ready to know more about today’s feature?
Keep reading the article below.
The Independent Investor
Have you ever been invited to a Bohemian-themed party? If so, what did you wear?
Florals and neutrals?
Retro patterns with vibrant shades?
Technically speaking, the Bohemian style focuses on color, life, and culture as its main aspects. It is a free-spirited aesthetic that mixes different cultures and artistic expressions into an eclectic fashion, with emphasis on organic elements and nature.
Simply said, the Bohemian style is done a little DIFFERENTLY.
Becoming Bohemian in Your Investment Strategy
In November 2022, Professor Joel Litman and his family traveled to Prague, Czech Republic. At present, the country’s economy focuses on manufacturing, agriculture, and the auto industry.
Back in the day, the Czech Republic was the Bohemian hot spot. The Lands of the Bohemian Crown, simply known as Bohemia, were a historical Czechoslovakian region established in the 5th century.
Allow us to share with you a brief background about Bohemia…
Bohemia flourished during the Dark Ages—a term for the Early Middle Ages characterized by economic, intellectual, and cultural decline.
The civilization continued into the 14th century, when King Charles IV wanted to make Prague the cultural rival of Paris and Rome.
The native Bohemians loved art and music. Aside from that, they welcomed people who entered their borders no matter what their religion or walk of life was. Eventually, this group of people became known across Europe for their eccentric way of living.
Today, the term, “Bohemian” is synonymous with an unconventional lifestyle. It means being non-traditional, whimsical, and against the grain.
How does this concept apply to investing?
Generally, being different is great investing advice. If you want to beat the market, you have to go against the consensus, much like what the Bohemians did.
What does “going against the consensus” look like for investors?
- Not easily following or believing Wall Street’s research methods. There’s a science to investing that relies on various financial models and analyses.
- Adopting a Bohemian approach. In investing, there’s an art in which psychology, emotional intelligence, and other qualitative factors play an important role in growing one’s investment portfolio.
Are you ready to be Bohemian in your investment strategy?
This is especially true during times of crisis.
For example: At the onset of the COVID-19 pandemic in March 2020, almost everyone panicked about the world’s economy collapsing. A lot of sectors were at risk, but if people looked at the right places AND went against the consensus, they would still see lots of opportunities.
That’s how Professor Litman and his team identified the trend called, “At-Home Revolution.” Due to the lockdowns around the world, people invested in their homes like never before, buying several home office equipment, home security systems, furniture, and cooking equipment.
One of the companies that benefited from this trend was education-technology company Chegg (CHGG).
Chegg provides textbook rentals, online tutoring, and other services to students. During the peak of the pandemic, lots of people needed at-home resources to excel in their classes even when they’re studying from home.
The thing was, many investors missed the setup. With stock still floundering in the first few months of the pandemic and with almost everyone having a negative view of the market, Chegg’s as-reported data made it look unprofitable.
Professor Litman and his team knew the consensus wasn’t right about everything. So, like the Bohemians, they adopted a contrarian view and added Chegg to Altimetry’s Hidden Alpha model portfolio in May 2020.
Altimetry subscribers were able to buy in before the market caught on. Those who followed Professor Litman and his team’s advice experienced a 94% gain in just 7 months.
Woah… that was incredible!
By the time many investors realized what they were missing, the market opportunity in Chegg had already evaporated.
What does this example tell you?
There are powerful investment opportunities on the other side of the consensus.
By keeping an open mind even when other investors have already made up their minds, you can make HUGE returns especially if sufficient data backs up your different view.
We hope you find today’s topic interesting, helpful, and insightful!
Remember: The best investing opportunities usually happen if you zig when everyone else zags… and like the Bohemians, a bit of unconventional thinking can put you way ahead of the investing pack.
(This article is from The Business Builder Daily, a newsletter by The I Institute in collaboration with MBO Partners.)
About The Dynamic Marketing Communiqué’s
“Wednesdays: The Independent Investor”
To best understand a firm, it makes sense to know its underlying earning power.
In two of the greatest books ever written on investing, the “Intelligent Investor” by Benjamin Graham and “Security Analysis” by David Dodd and Benjamin Graham (yes, Graham authored both of these books), the term “earning power” is mentioned hundreds of times.
Despite that, it’s surprising how earning power is mentioned seldomly in literature on business strategy. If the goal of a business is wealth creation, then the performance metrics must include the earning power concept.
Every Wednesday, we’ll publish investing tips and insights in accordance with the practices of some of the world’s greatest investors.
We make certain that these articles help you identify and separate the best companies from the worst, and develop your investing prowess in the long run.
To help you get on that path towards the greatest value creation in investing.
Hope you’ve found this week’s insights interesting and helpful.
Stay tuned for next Wednesday’s “The Independent Investor!”
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