About
C5: Concentrated Investing.
If you invest in ONLY the S&P500, you may enjoy feeling diversified. However, 10 stocks comprise at least 20% (the average since 1990) or nearly 40% (2023 peak), or 32% (April 2024), but we'll just say... your "diversified" index is 23.5% concentrated. So, even if you can't name the top 10 weighted stocks in the S&P500, you likely could name 10 companies (which are stocks in the S&P500) that are well out of favor. Removing those alone would allow you to perform better than the overall index.
If you are confident you can find 10 dead fish in a 500 fish pond, the C5 fantasy investing challenge allows you find 5 of the strongest swimmers using a simple framework of where do you make money, store money, use money, and spend money. Easy? Yes!
- Continue reading these instructions, then...
- Choose your 5 stocks for 80%.
- Choose another 5 stocks for 20%.
- Review/learn from results each week.
- Changes due by noon each Sunday.
Prize: Fantasizr.com/sports/C5 is the practice field for the real money you may choose to invest on your own trading app or with your financial advisor. As we grow paid subscribers on Substack, we will begin awarding cash prizes that correlate to the paid subsciber base in July 1st. Our hope is that your winnings with your actual investing benefit from your time on the C5 practice field...that is until we can make this an automated, integrated option!!!
Pro Tip: Invite your advisor (or unpaid financial friends) to play on their own and use the results to frame your future investing discussions.
This is followed by three stocks ~10% each, or 12%,10%,8% (for an average of 10% each) bringing the total to 80% from five stocks.
The remaining 20% can be invested in one stock or two@10% each, four@5% each, or ...five@4% each. The recommendation is two@10%, but SHOULD be 1@20% when the timing is short-term correct and 5@4% each when there is no clear winner.
Scoring
Track all markets on TradingView
Concept: Within the five hundred stocks in the index, we have a structure to try and pick five or up to 10 likely to outperform the other 490. While it sounds simple to the stock picker in each of us, you may not feel like a good "stock picker" and hence the task is daunting because you don't have the time to know them all. 100% concentrated, but if you invest all of your money in the S&P500, 5 stocks represent 23.5%, 10 stocks comprise 32%. Both are well above the 20% average concentration since 1990!
Five stocks comprise 80% of the RISK-ON!!! portion of your portfolio.
Example: You have $1,000 to invest. If your RISK-ON!!! portion is 10%, you have $100 of fantasy money to invest here. Each week we email you results. Changes to your RISK-ON portfolio can be made by Noon ET each and every Sunday.
C5 tells you to use the 80/20 rule.
- 80% in 5 stocks from each of 5 specific categories.
- 20% in 5 stocks or less in any stock you like for any reason.
The 5 categories for the 80% comprise your investing LIFE, wherein you have...
- Economy: TRL$. While many companies have a large moat of partners that collectively move in high correlation together as an economy does. This is true of stocks whose valuation is +/- $1,000,000,000,000! Yes, one trillion dollars. These firms are BMAMANA. (ba-ma-ma-na...ba-do..da-doo-do, manamana). Choose wisely (NVDA>TSLA be the 1Q24 lesson)...be willing to change weekly as the charts speak.
- Bank: BANK. Whatever your job, it likely is in one of those places. To receive money from your job in any of the economies (aka - stocks), you need a bank to receive your compensation. Banks can do many things, but at the core, they are where you have money. While valid banks trade in high correlation, they are not all the same based on the range of products offered. Chose the bank thriving in the products they offer, not just one that offers all products. It doesn't even need to be your bank, but the one you want to bank with, and then (on the side) try to get your money to that bank!
- Payments: PYMT. With the money in your bank, you need to be able to spend it. Since society exited the barter system, payment was in a "finite" amount of gold as a measure of exchange. Then came gold-backed currency (physical dollars and coins.
- Wants/Needs: WANT. The greatest want, such as tickets to an amazing sporting event or concert, is something we do not NEED by definition. Yet, even if you choose to avoid spending on wants, there are many companies who only provide products/services/experiences that are wants. To invest in wants is different than purchasing the "WANT" items. Invest in WANTS by choosing among the companies providing the most in demand wants, which should provide profits for your NEEDS!
- Needs/Wants: NEED. The greatest need, such as food, can simply be a need such that it is sourced solely for the energy food gives our body to survive each week/day. However, investing in a need does not need to be in a large seemingly stable company who provides only food for sale. Being profitable in the restaurant business is challenging, and so is investing in restaurants. Remember, you do not need to be dining at your restaurant or shopping at that grocery store, but wherever you believe the greatest demand exists for any size niche is a place you can invest in food as your "NEED" investment.
