NEW YORK (MainStreet)—As a 19-year-old investor, I don't have access to Goldman Sachs research, a Bloomberg Terminal or a team of analysts.
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Yet as a 19-year-old college student, I do have a girlfriend and a Twitter account.
Back in January of this year, as I was trying to figure out what to buy my girlfriend for her birthday, I asked her, "Do you like Coach or Michael Kors these days?"
"Michael Kors," she immediately replied. "Nobody likes Coach anymore."
This made no sense to me. On the one hand, my girlfriend is the most fashionable mechanical engineer you'll ever meet; yet on the other hand, Coach's stock price didn't reflect that the company was out of fashion. Fast forward to today, and Coach is down over 10% while Michael Kors has soared 25%. I quickly learned to invest in what she is interested in.
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On October 2, 2012 David Einhorn recommended shorting Chipotle. One of his main arguments was that Taco Bell has been successfully selling its cheaper "Doritos Locos Tacos." In April of this year, Jeff Gundlach also recommended shorting Chipotle, saying that the idea of a gourmet burrito is an oxymoron. Both seemed to agree that Chipotle is selling a commoditized product for a premium and it cannot last. Well, I scroll through my Twitter feed on a daily basis, and there are more tweets in my feed about Chipotle than any other company. The idea of a gourmet burrito IS real, and it is a revered thing! Everyone I know, myself included, is more than happy to pay a premium for a Chipotle burrito. Chipotle, similar to Whole Foods, has a powerful brand that allows the company to charge a premium.
Shortly after Gundlach announced his short, I took the other side of the trade, and I made a 15% profit. If I still had the position it would be up over 20%. Oh, and if I bought the stock after Einhorn announced his short? 40%.
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I am a 19-year-old college student and I have handedly beaten the markets year-to-date -- something few hedge funds can say they've accomplished. I know how to conduct proper fundamental and technical analysis, but my biggest wins have come from unconventional sources. My best stocks have gone beyond the traditional metrics of investing. I don't ignore PE ratios and earnings per share, but I am certainly not bound by them. You don't need to be a financial whiz to pick stocks. You simply need to see the investment opportunities in everyday life -- that seems to be a skill many hedge funds are lacking.
Written by Alex Pottmeyer