The run way / the most important thing

"I made most of my money by sitting on my ass."
-Buffett

The run way

What's the biggest factor in capturing a 100-bagger?
‍The Run Way - the amount of time needed for the stock to take flight. Let's be very direct. It takes a shit-load of time for a 100-bagger to play out. On average it takes 25 years. Let that sink in. A quarter of a century is most likely needed.

In theory, the stocks with the longest stock market run way are recently IPO'd companies.
Now its not a for sure thing - we know - talk to Yogi Berra about theory and practice if you want. But IPO's give us a great filter in picking tomorrows 100-baggers.
Besides, all the studies ever done on 100-baggers - start from the proverbial "if you invested $1000 at the IPO you would now have..."
So we are only interested in purchasing recently IPO'd companies and holding them for a long time.

And due to the lengthy timeframe a "coffee can" approach is recommended.

In the ol' days, cowboys would take their most precious valuables and put them in an aluminum coffee can. Then usually go hide the can. There it would sit for years and years, untouched. Or in more modern times, Uncle Eddy did the same in Vegas Vacation - cash stuffed in coffee cans, buried in the backyard.

This is an amazing analogy for what we need to do with our potential 100-bagger stocks. Buy - then put them in a coffee can and forget about them for a long long time.

We like to have a little fun with this.

Upon purchasing a potential 100-bagger, we then print a fake stock certificate from Google images. We fill that certificate out with the appropriate information. Then we fold it and place it in a coffee can. And there the stock certificates sit - collecting dust and maybe some bugs.
The coffee can is appropriately marked "Are you just bored?" to remind us to not act on impulse out of boredom before opening the can.

It may sound gimmicky - but this is our approach.

Those stock certificates can only be taken out and thus sold, once one of the Sell rules hits.






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the most important thing

Prolific investor and founder of Oaktree Capital Management, Howard Marks, wrote a book titled The Most Important Thing published in 2011. It's one hell of a book that we highly recommend. Within the book he describes 19 different topics that are his "most important things" in the world of investing. In the spirit of his writing, we too have come up with an original Most Important Thing.

The most important thing is...

The ability to entertain yourself.

If time - and lots and lots of it - is the biggest factor in capturing a 100-bagger, then what does one do to fill in the time so as to not act on the stocks they hold? This is completely up to the individual - but the individual has to posses the ability to entertain oneself. This takes a bit of creativity within the individual.

What do you love doing?
Is it fishing? Going to the gym? Reading? Working? Biking? Walking the dog with an audio book? Reffing basketball? Spending time with your family? Then do it! All of it...all the time. And continue to come up with more ideas and more ways to enjoy life.

Because if you are going to wait a very long time - you mine as well have fun and improve yourself while waiting.

But if you struggle with coming up with ideas for yourself to have fun, to improve, to enjoy, to think - then do not become an investor. You will not be able to hold on to a stock for the long term. You will get bored - and that boredom will prompt you to find excitement - which will lead you to sell your stocks.

In one respect you are living your life to the fullest. But secretly you are doing so to purposely distract yourself from the markets. Warren Buffett is the master of this.
See What does Warren Buffett do All Day?

In order to hold a stock for 10-25 years you either need to die or forget about it. If you don't want to die, how do you forget about it? You have to entertain yourself. You have to fill up your hours, your days, your life with fun, entertaining, enjoyable or simply busying practices. Because when you get bored you get prompted to act. So...don't get bored.

"Nobody entertains Dave, like Dave."
-Dave

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Want to tell us what your favorite hobby is? We will not laugh. Let us help you.

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