You have to get outside and talk to people about their investments to know what to talk about and write about. That has been the secret of the "Lightning Round." It is the essence of the emails and the worth of following Twitter. But there's nothing like going out there and actually speaking to people about stocks and the market and then taking their questions.
That was the privilege I had this weekend when I spoke at the Quogue Library fundraiser in New York. The library is one of those grand institutions that is actually packed every single day. You are always amazed at the number of cars parked in front of it even on a sunny summer afternoon, and it is a reminder that plenty of people don't use Amazon (AMZN) to get their books.
After speaking about some new positive themes that I have been talking about since Get Rich Carefully came out at the beginning of the year, I was struck by how irrelevant politics has become to investments. My biggest applause lines from the 400 attendees who paid $20 to hear me? How we should stop focusing on Washington and spend more time identifying companies that are making good money no matter what. The questions were largely about why people spend so much time talking about the ideology of the Fed and of the politics behind interest rates and not on how to find good ideas and getting good advice about how to preserve and grow capital.
The most asked question, though, at least in various permutations, was, "Who do you trust and how do you find those people?" I think it's an important point to discuss, because most people are too busy or too scared to invest in stocks, besides one or two that capture the moment's fancy.
For some who want stock exposure but don't have the time or the inclination to do homework and study companies, I emphasize that S&P 500 funds are fine, although I hate shooting for average, in the same way I would never want my kids to be just average. You are shooting too low. I urged people to search for best-of-breed companies, defined as market leaders with good managements, and then get familiar with them by reading the conference calls and understand how to value the stocks against the overall S&P 500 and their sector, looking for companies that are growing faster and selling for less than the average stock in both cohorts.
In order to do that well, I urged people not to rely on software but to try to find someone, a human, to help. That way, if you can explain the idea to that adviser and get some research on the idea, you can be more informed and do a better job. Again, if you can't get any help, you might need to default to being average. I urged everyone to ask their friends for the names of brokers or advisers who have done well. I still love word of mouth as a reference. Another applause line: It's not better to talk to a machine than a human, even though that's antithetical to the way the industry is going.
Finally, people still want income from stocks, because interest rates are still too low. They are looking for ideas that give you decent growth with above-average payouts. For these people I emphasized Verizon (VZ) as the top-quality name with good yield, and master limited partnerships such as Enterprise Products Partners (EPD), the pipeline company that yields 3.65%. In all cases I emphasized that the more work you do, most likely the better you will do.
To sum up: They want less politics, more ideas and more help from thoughtful humans to do a better job managing their finances. Too much to ask for? No, if anything, a perfectly reasonable request that the industry would do well to think about.