The Beetle Syndrome
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The Beetle Syndrome in Stock Market Investing
A Strategic Approach to Stock Market Investing
Marcus Padley | August 9th 2024 | Education Corner
The Beetle Syndrome in Stock Market Investing
The practice of hitting someone on the arm and saying “Punch Buggy Red” every time you see a red Volkswagon Beetle 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 hear about a particular car, any car, you start seeing that car everywhere. The Beetle syndrome is when you suddenly see red volkswagon Beetles everywhere.
You can use this concept in a variety of ways, even in
stock market investing.
For instance.
Drive your kids to the airport, 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 for some kids) 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.
Stock Market Application of the Beetle Syndrome
It is a concept that also works
in the stock market, but consciously rather than subconsciously.
For instance, every stock you buy embeds itself, like a red Volkswagen Beetle, and the bigger the holding, the more risky the position, the more volatile that stock, the more fear and greed is involved, the more emotion is 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 daily ruminations, and they could blow up or explode up, and you might not even notice them. Because your life doesn’t depend on it.
But for those playing a bit harder, those stocks embed, your antennae go up, and you pick up on any and everything that has a bearing of their share price. As it should be.
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Creating a Watchlist: A Practical Use of the Beetle Syndrome
Nothing peculiar there. All the stocks you hold and care about form a fleet of red Volkswagen Beetles, and you see and hear everything that affects them.
But there's another use for the Beetle Syndrome in the
stock market investing that you might find quite useful - building a Watchlist.
Any stock that crosses your path, a tip, a newspaper article, something in
the Marcus Today newsletter perhaps, you don't have to buy it, but rather than forget it, take a note, a scribble somewhere (I have them all over my daysheets) and next time you’re in front of your screen, add it to a watchlist. Link it to live pricing and when you look at the stocks you hold, also look at the stocks 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, and monitor hypothetical holdings. At no risk to yourself, hypothetically buy $50,000 worth, and see how you go.
Knowing it's hypothetical you can 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.
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In the end, I guarantee a few things:
- You will learn a lot more about your Watchlist stocks.
- You will pick up on anything that affects your Watchlist stocks.
- The Watchlist stocks will find their way onto the real list after you watch them for a while and get to know them.
- The performance of your Watchlist stocks will put your real list into perspective.
- You'll start to tinker with your risk profile.
- You will identify ‘disappointment' and joy with your real stocks more quickly.
- 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 your investment process.
- You will appreciate the lack of value in many ideas.
- You will be on the lookout for more ideas.
- You will learn a lot.
Applying the Watchlist to Market Themes
Example - Create a watchlist for a few stocks exposed to a theme - say Lithium, or Uranium or Electric Vehicles. A growth industry that could be a fad and could provide significant gains. Now whenever you hear anything about those themes, your antennae go up, you learn more, you add stocks, you understand the drivers, you see how they behave, you learn their announcement patterns, and you get more or less comfortable with the validity of the theme.
Consciously and constantly embed 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, and stocks with impressive growth prospects. Start the Watchlist and you start the process of learning, of understanding, of risk reduction. You don’t have to buy them, just embed them for a while and see if they pop up again. If they are succeeding, then one day you will end up buying them, and when you do you will be taking a lot less risk thanks to the process of embedding that started months or years earlier.
The Watchlist. You know it makes sense.
Footnote: Apologies to all those sixteen-year-olds being dropped off by their parents after reading this. If your Mum shouts “Hey, you’d be really good at heart transplants” and drives off....it’s my fault.
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More about the author – Marcus Padley is a highly-recognised stockbroker and business media personality. He founded the
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