Beginners Education – The Beetle Syndrome
I had to choose what University degree I wanted to do at the age of 16 and to help me decide my parents forked out a few hundred hard earned pounds on top of the school fees for some skills and personality testing which led to what I considered a blindingly obvious and therefore stupid conclusion that I should do at University what I was doing (and enjoying) at school, my specialist subjects of English Literature, English Language, Maths, Physics or Chemistry.
It annoyed me that they had milked my Mum and Dad for something anyone could have told them and because of that and because I was a belligerent sixteen year old, I ignored them. My brother was doing medicine, I wanted to be a fighter pilot, so I decided to do Law.
It was one of the worst three decisions of my life and having completely bogged it up myself I now have a keen interest in guiding my kids during the rather vulnerable ‘career choice’ stage of their development. But being teenagers you can’t tell them straight and you have to be more subtle, so this is how it’s done.
Do your kids ever hit you and shout “Punch Buggy Red” whilst you’re driving. Mine do. I thought it was some part of Australian culture that I had missed in my childhood, but it’s not. It turns out that it came from a marketing campaign by Volkswagen started in 2009, the “Punch Dub” campaign. It was the very commercial usage of something I have always known as the “Beetle syndrome”.
The Beetle syndrome is the concept that once you start looking to buy a particular car, any car, you start seeing that car everywhere. The Beetle syndrome is what happens when you become conscious of a previously unnoticed car, person, concept, country, anything and suddenly see it everywhere, because it interests you when it didn’t before. The Beetle syndrome is something you can use to manipulate your kids. It goes like this.
Drive your kids to the airport, an event, a date, and just as they get out of the car call them back and say “Hey, you should go to Russia one day” and before they have time to say anything, drive off.
They won’t understand but by hitting them with something unfamiliar and out of context it will stick and assuming they have an interest factor and memory capacity beyond that of the average frog (a big ask) they will forever have the concept of visiting Russia in their brain. A concept you embedded.
Years later they’ll be standing at a cocktail party and at the back of the room they will hear someone talking in a Russian accent and courtesy of that day at the airport their antennae will prick up, they will wander over and say “My Dad once told me I should visit Russia” and before they know it, they will.
It is a concept that works subconsciously on you as an investor in the stock market. The stock market is ultimately not about the stock market as a whole it is about individual investments that combine for a result, but ultimately, it is about the individual stocks you buy.
If you are half-engaged, every stock you buy, embeds itself, and the bigger the holding, the more risky the position, the more volatile the stock, the more fear and greed involved, the more that individual stock embeds.
Arguably if you hold thirty stocks and don’t care about them individually, you don’t embed any interest at all. Your holdings don’t penetrate your day and they could blow up or explode up and you might not even notice them, their results, your failures ort your successes. Because your life doesn’t depend on it.
But for those playing a bit harder than the plain vanilla diversified large-cap portfolio (why don’t you just buy and ETF or invest in an Industry Fund?) you get to know those individual stocks very well and nothing else matters. You’ll know which stocks they are, they are the stocks you are already checking every day.
The interesting use of the “Beetle Syndrome” is for stocks you don’t hold. Its riskless but healthy. If you find a stock that looks interesting, it can be anything, a tip, a newspaper article, something in the Marcus Today newsletter, take a note and next time you’re in front of your screen, put it in a watchlist. Your “POTENTIALS” watchlist. Have it linked to live pricing and when you look at the stocks you hold, also look at the stocks you are thinking you might hold.
Keep that watchlist up there, constantly dump and renew the holdings and, if you really want to spark your own interest, put them on an excel spreadsheet, take the amount of money you have invested for real, and spread it across hypothetical holdings on your POTENTIAL WATCHLIST. So if you have $500,000 invested, for a laugh, invest $500,000 across the stocks you don’t hold.
Knowing it's hypothetical you can now take a lot more risk. Maybe do things you wouldn’t do. Put the whole lot in one stock. Put the whole lot in two stocks.
In the end, I guarantee a few things:
- Stocks on the potential list will find their way onto the real list. But (sensibly) only after you have lowered the risks by ‘getting to know them’.
- It will put your real list into perspective.
- You will develop ‘disappointment with your real stocks more readily.
- You will sell in real life more readily.
- You will enjoy taking risks in the potential list (at no cost).
- You will learn where knowledge ends and luck begins, without losing money.
- You will re-jig how you invest for real.
- You will appreciate the lack of value in many ideas.
- You will be on the look out for ideas.
- You will focus on growth not income.
- You will learn a lot.
Last year I created a watchlist for a few stocks exposed to Electric Vehicles. It’s a growth industry. Now whenever I hear anything about Electric Vehicles my antennae go up and I learn more and the risks of finding the best company and making money in these stocks, and not losing money, improves.
You can do the same thing. Consciously and constantly embedding (listing) stocks that catch your attention, stocks you read about, companies you see doing well on the street, stocks in growth industries, stocks with particularly interesting managers, stocks with impressive growth prospects and so the process starts. You don’t have to buy them, just embed them for a while and see if they pop up again. If they are succeeding they will and one day you will end up buying them and when you do you will be a lot better off for the process of embedding that started months or years earlier.
Footnote: The best career advice my kids have ever had came from their school and it is along the lines of do what you enjoy and what you’re good at. If only I’d known. And apologies to all those sixteen-year-olds playing basketball this weekend. If your Mum shouts “Hey, you’d be really good at heart transplants” and drives off, it’s my fault.