Invest Like a Rebel

If you want to build wealth by investing in stocks it pays to know something that others do not know. Accomplishing this is deeply related to investing in an unconventional way, or investing like a rebel.
First there is the basic principal. The majority of people are not interested in stocks yet most of those people would agree that they could use a few extra bucks. The basic principal of knowing what others do not relates to your interest in stocks and the recognition that investing in them can be financially beneficial. That realization is important because a lot of people don't make that connection and will never buy a stock. Simply knowing this and acting on it puts you ahead of the wealth building curve and solidifies your unconventional nature.

The basic principal of knowing what others do not refers to an advantage in knowledge versus the general populous. However, to be a successful investor you must evolve to know something that most other investors do not know. This proves to be more difficult. In my experience, you can gain a considerable investing advantage when you get to know something that most other investors do not know. To me, if you can't find an advantage in stocks it's best to just buy an index fund.

Gaining an edge in stocks is deeply rooted in being unconventional and investing like a rebel - and most investors do not know this. Generally, investors are comfortable staying with large well known blue chip stocks, and sticking to conventional wisdoms like 'you must diversify' and 'no more than 5% of the portfolio in one holding'. It makes sense that if you invest like everyone else, you'll probably end up underperforming the index, just like most professional mutual fund managers. So the goal is to avoid the common methods of the masses of underperforming mutual funds. As a do it yourself investor you can enjoy freedoms that fund managers do not have. There is no need to worry about a director or manager criticising your every move. It's easier to invest outside the box and adopt a rebel mentality.

In my opinion, rebel investing means exclusively sticking to small and medium sized stocks as opposed to the big dinosaurs the funds own. It means not diversifying in sectors you don't understand - personally I avoid mining and oil and gas stocks all together. It means not benchmarking or following any allocation rules - feel free to have 25% or more of your portfolio in one stock. It means sticking to underfollowed, simple, easy, growing businesses at a fair price and avoiding the widely known stocks that are constantly covered in the media. It means having the temperament and conviction to let your winners run.

Whatever rebel investing means to you, it always helps to have a solid foundation. Learning from the past great investors is the best way to develop the basics. I recommend Peter Lynch, Warren Buffet, Ben Graham and Ken Fisher. Also a must read is Reminiscences of a Stock Operator. In my experience, a basic investment foundation paired with an unconventional investment method is a framework for outperforming in stocks.

John Laframboise is founder and author at http://www.riseofamillionaire.com, a personal finance Blog that follows his progress to become a millionaire. John has held positions within the Canadian banking industry and has a Bachelor of Commerce from the University of Windsor in Canada.
 

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