When I first saw the Disney movie The Little Mermaid, I was captured by a line uttered by the villainous sea witch, who taunted the heroine to give up her prized possession (her voice) in exchange for the legs she yearned for. "Life's full of tough choices, isn't it?" she said.
See Also: An Investor's Manifesto
I recently found myself at just such a crossroads. I love writing Practical Investing. We launched this column in 2011 as an experiment in whether a buy-and-hold investor (me) could meet or beat the performance of the market by buying individual stocks. The answer: no. Since inception, I'm way behind the market, despite performing better in most years. My undoing: 2015, when my portfolio lost 20% and the market held steady.
Readers seemed to love the reality, humility and hard lessons you learn when investing real money and comparing your returns against a tough benchmark: the Vanguard Total Market ETF (symbol VTI). The column has always felt like a candid discussion with a friend.
But a couple of years ago, I started researching the burgeoning gig economy. I wanted to find out what kind of opportunity (or lack thereof) this marketplace offered to freelancers. The project turned into a website, SideHusl.com, that is doing well enough to demand an increasing amount of my time and attention.
Why did I choose to focus on SideHusl? Because you're already well taken care of by the wonderful editors at Kiplinger's. The people I write for at SideHusl have few journalists looking out for them. The crusader in me says this underserved market is where I need to spend my time.
To explain: Companies such as Uber and Lyft are thriving and creating a host of founder billionaires in a fast-growing marketplace that depends on independent contractors. But the fortunes at the top of many gig-economy companies are sometimes made at the expense of line workers, who are frequently given misleading information about their jobs. SideHusl is meant to be a Consumer Reports-like service to help people vet these companies before they risk their time or assets.
As I retire the Practical Investing column, I'd like to reiterate a few truths about investing:
Quality is key. Look for companies with great products, good earnings and strong balance sheets. My 2015 debacle was caused by trying to invest in "hot" stocks, including oil-and-gas producer Stone Energy, that didn't have staying power.
Be patient. Stocks are for the long term. Buy shares in companies you want to own, and hold them for decades. I've regretted almost every sale, as great stocks such as Lockheed and Microsoft continued to soar after I sold.
Trust yourselves. The many e-mails I've received from Kiplinger's readers tell me that you're smart and thoughtful and do your research. Don't let pundits convince you to abandon your reasoned strategy. Most claims about beating the market are based on faulty analysis, short or cleverly managed time frames--or lies.
"Average" returns are awesome. The average annual return of big-company stocks, from 1926 to the present, is roughly 10%--about three times the average rate of inflation. You don't need to swing for the fences when market-meeting returns are this great. The Practical Investing portfolio has doubled in value over its 7.5 years, for an annualized return of 10.28%. (See the final update of the portfolio at kiplinger.com/links/practicalportfolio.) It's not market-beating, but it's not too shabby, either.
I'm not yet sure whether I'll continue to manage this portfolio or use the money to finance growth at SideHusl. What I do know is that it has been a true pleasure sharing highs and lows with you. If you'd like to keep in touch, you can e-mail me at KathyKristof@sidehusl.com.
Copyright 2019 The Kiplinger Washington Editors