Daily Insight: Investing Like a ‘Fanboy’

Daily Insight: Investing Like a ‘Fanboy’

I’ve never liked the term ‘fanboy’, or 'fangirl', due largely to the negative connotations associated with the phrase itself. In investing, for example, Tesla ‘fanboys’ have a reputation for ignoring investing principles and blindly buying into whatever Elon Musk tells them to.

This also applies to r/wallstreetbets and the thousands of investors who dove headfirst into AMC and GameStop due to being ‘fans’ of the subreddit’s creator, Roaring Kitty.

However, being the selfish creature I am, I did not think too hard about these connotations until I found myself the victim of a vicious verbal assault in the latest episode of the Stock Club podcast, being labeled an ‘Apple fanboy’.

After days of plotting my revenge and cursing the analyst team for their smack talk (especially you Mike), I decided to think about that label — ‘Apple fanboy’.

I realized that Apple is the largest and oldest position in my portfolio. I’ve been a fan of the company since I was a child, have an advanced understanding of its business, use its products and services more than any other, and believe in its long-term growth potential to this day.

In short, I’m an Apple fanboy because Apple is my anchor stock — totally different from the examples of ‘fanboying’ above.

An anchor stock is one that all long-term investors should have in their portfolio — and for you Microsoft and Android fans, it doesn’t have to be Apple, don’t worry.

It is usually:

  • a stock that represents a significant portion of your portfolio.

  • any stock that you will continue to hold and top-up forever.

  • a large or mega-cap stock (such as Amazon or Berkshire Hathaway), meaning that its stock price movement is not volatile, quite literally ‘anchoring’ your portfolio.

  • a business that has the potential to pay strong dividends, which in turn can be reinvested into your portfolio or used as income later in life. 

Some of you may already have anchor stocks and not even be aware of them, but it’s important to identify one that you can rely upon with a long-term plan in mind.

By investing in a ‘safe’ anchor stock, it can help you build a stable core for your portfolio. While other, riskier stocks in your portfolio suffer from regular volatility, your anchor stock should remain steady, growing at a slower, less volatile rate. This can minimize the damage in case these riskier businesses fall on hard times, as well as diversify your portfolio.

Having an anchor stock also fits in nicely with MyWallSt’s beliefs of ‘buying what you believe in’, and can act as the foundation to all of your future wealth plans. Whether that means buying and holding for five years, 10 years, or half a century, knowing your anchor stock and having it tick away in your portfolio could be the very thing that keeps you from selling off all of your riskier holdings the minute things get tough.

And if it’s a stock that you ‘fanboy/fangirl’ over, then that’s fine too.

JamieJamie

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