Motley Fool Hidden Gems Investing - Investing in 2026: A Plan You Can Stick With

Starting point is 00:00:00 Jason Hall. It's a new year and for millions of people around the world, that means turning over a new leaf. A lot of them, maybe you, have resolved to make 2026 the year they commit to and stick to an investing plan. Today is Thursday, January 1st. Welcome to Motley Fool Money. I'm your host, Jason Hall. Today, I'm joined by Fool analyst, Dan Kaplinger, and the aforementioned John Kost. We're going to share our own investing struggles, successes, and how we've been able to keep investing once the shiny new wears off and the reality of investing is hard has set in. Okay, guys, the dirty little secret of the fitness industry is that it depends on January for all those new customers to join, and then February for them to stop coming but

Starting point is 00:00:52 keep paying for those memberships. Now, I'm being cynical here, but the reality is that we all have stories of a big commitment that we've made in the past and then failed to see through. We're not going to talk about our favorite fitness stocks either. We're going to talk about how we've gone through these mistakes and learned from them and then built investing habits that we can stick to. But first, let's have a little bit of fun, mainly going to be at your expense, John. What's an experience of a failed resolution that you want to share, maybe that you've learned from? Yeah. Well, it's not going to be hard to poke fun at me. this is an easy thing to do. Listen, I don't do New Year's resolutions. I don't. It's not my thing.

Starting point is 00:01:29 I hate the idea of waiting for a new year to make an important change. If there's something that I need to do, let's do it now. So I try to regularly take stock of life and course correct as needed. This includes, of course, course correcting when it comes to how I'm investing my money. And in the past, early days, I really despised the idea of investing a small sum in a risky company. I wanted it to be a rock-solid thing, and I wanted it to be a large position. I've learned maybe that's not the best approach, maybe a little bit more of a barbell approach, where I'm investing a lot of my money in safer things, but some of my money in riskier things. Right, Jason? Yeah, John. A barbell strategy is

Starting point is 00:02:11 something that I've learned to use myself for exactly the reasons you talked about. Let's get to the mistake. Come on. Okay. Well, if you're going to invest in a riskier company, at least have an investment thesis explanation of why you think that this could be a good stock, and then reinvest into the company as the investment thesis is playing out. As you see the improvements that you need to see as it's moving from riskier to safer, then invest more money. I tried to safeguard myself from that. Then many companies I invested especially in 2021, as my investment thesis is breaking and the stock is falling, then I start ignoring my own rule and investing more money into it because it was just so darn cheap.

Starting point is 00:02:55 Yeah. The famed investor, Michael Tyson, is famous for saying, everybody has a plan until the market punches them in the face. Yeah. And the market punched me in the face and I said, yes, please, can I have another? So, I put more money into a losing idea. Now, it did work out in one case. With Lemonade, I was waiting to see improvements in the loss ratio before I invested more money. I didn't actually do that. I invested more money before I saw that. Now, that has worked out okay here recently, but some of the companies that I doubled down on in that 2022-2023 timeframe, Some of them are actually zeros. I do this for a living and I invested in a company that went to

Starting point is 00:03:38 zero. So this is a perfect opportunity to roast you, but I've got a couple of those zeros to match here. So I don't know how much I can really poke you about that. Yeah, but how many of those did I recommend to you? Well, now you're giving me ammunition to work with here, but I'm not going to. I think the point is, and the big thing that take away from me is, you have to adapt. And when you fail to adapt, that's when you struggle. So, Dan, talk a little bit about that. Why it's so important in light of when people decide to get better about something like investing, a big stumbling block they run into that John managed to avoid. You know, Jason, you might notice when John was talking about those zeros, I was being very quiet

Starting point is 00:04:19 because I have plenty of those zeros of my own. And it's embarrassing, but it's just something that you have to get past. And, you know, I think that John's got a great philosophy when it comes to the lack of new year's resolution, just constantly being in a state of trying to self-improve because with resolutions, too many people are focused on the time element with new years, you know, it's coming. And so like the end of December is like this great time to sort of like slack off and do like exactly the opposite of whatever it is you're going to resolve and it's like you're waiting for the apple to drop and then suddenly everything's going to be easier and you're going to stick to the plan and everything is going to be perfect well it rarely

Starting point is 00:05:07 works out that way sure you start out strong you've got some discipline you've had plenty of fun beforehand but now once it gets difficult inevitably something's going to go wrong And at that point, if you tied so much to this idea of, I'm going to start on January 1st, and it's going to last throughout the year, something went wrong. It's so easy just to say, okay, well, that failed. I quit. I'm going back to my old behavior. There's no point in even trying to stick to this plan. I think the real thing that you have to learn is you're just not going to get to perfection. But the good news with investing is you don't have to. Just being right more often than not, is such a huge driver for investing success. But the one thing you do have

Starting point is 00:05:54 to do, you have to be resilient. You have to accept you're not going to bat 1,000. You have to accept that you're going to make mistakes. You're going to have embarrassing losses. Don't let that make you give up entirely. Just start over, put it behind you, move on to the next investment idea, and just keep going. Don't wait until 2027. Don't wait until the next New year's resolution phase. Just get up off the mat and move forward. That's the best thing you can do. Dan, one of the things that I've struggled with in the past, and the gym example is a good one, is we don't say, I'm going to go to the gym three times a week. We say, I'm going to get in shape. I'm going to lose 30 pounds. I'm going to make some money. I'm going to invest. I'm going to do

Starting point is 00:06:42 well. And we focus on the goal and then we stumble and we see the goal get further away and we give up versus focusing on the process and the habits that we need to build. And I think to me, that's really the common theme of, of, of all of this. I won't tell you guys how much money I gave to a gym that I went to five times. That's another show. We'll talk about that one. I think it's smart to have measurable goals, but at the same time, I also think that it's important to accept that you're learning something from the process that you're going through, even if it doesn't yield immediate success, it's going to be valuable experience somewhere down the road. You quoted the investor, Mike Tyson, but let me quote the investor, Rocky Balboa.

Starting point is 00:07:25 It's not about how hard you hit. It's about how hard you get hit and keep moving forward. Fantastic. Up next, we're going to move beyond those mistakes. We're going to talk about the lessons that we've learned that have made us better and more consistent investors. Unlike some of those resolutions, we hope you stay with us. New from Nespresso. Blend wellness into your coffee routine with the Coffee Plus range. Infused with functional benefits. Choose the coffee you love with added B vitamins.

Starting point is 00:07:53 Like Coffee Plus B12 to help support immune function. And Coffee Plus B6 to keep your day moving. Or go with the flow and choose Ginseng Delight. Our new Double Espresso with Ginseng Extract. Whatever lies ahead, don't change your morning. Let your morning change you. Discover Coffee Plus on Nespresso.com. Welcome back to Motley Fool Money. Dan, we had a little fun there at each other's expense, but let's talk about more of those lessons that we've learned and how we can apply them to

Starting point is 00:08:22 investing in a way that it's something we can stick to. I think one lesson that I've learned is that one of the hardest things for me to do with investing is buying a stock when I feel like I'm a little late, too late. I've missed the trend on something and that it doesn't make sense for me to try to get on board. Too often, I just say, to heck with it, I missed it. And then the stock keeps going up. And then I'm just like, well, why did you give up on that? But I find myself, you just have to work on it. Recently, I took a step in the right direction. I bought shares of Dollar General, which is ticker DG. I found myself inside their stores more often than ever expected to, because it's proving to be a good go-to for discounts on some items like

Starting point is 00:09:06 soft drinks at grocery stores. They're just really using pricing pressure. They're maintaining ridiculous margins on them. Dollar General, much more attractive there. Dollar General stock has not done well until recently. It did well during the 2022 bear market, but then it tanked. 2023 2024 wasn't able to sustain the growth targets that it had set but since late 2024 it's doubled off of its lows and i'm ticked that i didn't hone in on the turnaround more quickly in the past that would have totally dissuaded me from buying but i'm going in the other direction i'm giving it a shot this time recently bought some shares so this is almost like a couple weeks ago the three of us were on together and we talked about alphabet and this is one that you saw the

Starting point is 00:09:53 opportunity to buy in the past at a time that it was down. And this is a lesson that I've learned too. Um, and the thing is with dollar general, you know, that's a real turnaround. The business was really, really struggling. And what I've learned is sometimes it's better being late to the turnaround than rushing too quickly when the business is still struggling. Uh, John, what's, what's a trick that you figured out that's helped you keep at it? Yeah, I've started to prioritize investing in companies that I really love the brand or the business. I really just love the company. I'm not exactly sure when it was. It was a couple of years ago. I just looked at my portfolio and all of the companies, of course, that I'm invested in, I believe can go up,

Starting point is 00:10:37 but it wasn't necessarily a group of companies that I was in love with, not a group of companies that I was excited about. And look, it's not a mathematical thing, but it is a psychological thing. Let me frame this for a second. Of companies that are worth more than $10 billion, four of the top five over the past 10 years are Nvidia, AMD, Celsius, and Shopify. Each one has been down 30% or more multiple times. Three of them have been down 70% during their time of being four of the top five best-performing stocks. Here's the thing. If you don't love that company, if you don't love that business, when it drops that much, you start saying, do I really want to own this? Is this something I really want to hold? And then you sell at

Starting point is 00:11:25 precisely the worst time. And so I've been prioritizing investing in companies that I do believe have good upside, but that I also love and building my portfolio around brands that I really want to hang on to through thick and thin. So it's not mathematical, it's psychological, but there is a huge psychological component to investing. It's such a great point, John, because when you believe in the business, there are all these naysayers who are pushing the share price down. You just tell those naysayers they're wrong, no matter how far the downturn goes. Now, obviously, it doesn't mean that you're going to be right every time, but in the times when it doesn't work out, at least you don't

Starting point is 00:12:04 have the double head of saying, well, gee, I always hated that company. Why did I ever buy shares in the first place. When it does rebound, like those stocks that you mentioned, it just feels so much better, even better, to get those big gains after having endured such a long period of hardship. One of the interesting things about this to me is that if you're starting with a business first, it certainly helps, especially with something like regret minimization, which is really hard. If you start with, I really like the business, like you said, it certainly helps holding through the downturns. But my one caution is there's a thin line between really being compelled and attracted to a business and then letting that become bias that makes it harder

Starting point is 00:12:50 for you to be objective when there are real struggles with the business. Yeah, that's certainly, it's certainly a double-edged sword. We do need to maintain a sober assessment of the company and its outlook, its ability to create value over the long term. If you are in love with the company, it may be a little bit harder, but it does carry the benefit that we are talking about. You're going to hold it and holding onto potential winners is so crucial for a long-term success in a portfolio. Okay. So we've talked about a few things that we've done, but up next, I want each of us to share a habit that we formed that's made a big difference in our own investing and personal financial success. So stick with us for that.

Starting point is 00:13:30 New from Nespresso, blend wellness into your coffee routine with the Coffee Plus range, infused with functional benefits. Choose the coffee you love with added B vitamins, like Coffee Plus B12 to help support immune function and Coffee Plus B6 to keep your day moving. Or go with the flow and choose Ginseng Delight, our new double espresso with ginseng extract. Whatever lies ahead, don't change your morning, let your morning change you. Discover Coffee Plus on Nespresso.com. Welcome back to Motley Fool Money. To wrap up today's show, let's each share something

Starting point is 00:14:04 that we have figured out that really helps us stick to it over the long term. I'll go first, guys. The one thing that's made a big difference for me is delaying my earnings reviews for my core holdings. I have a lot of professional obligations to The Fool and its members for a number of companies that I follow. But in general, I don't really dive deep into earnings for most of my personal holdings until we're weeks on the other side of earnings season. Now, the reason that I do this is I want to be completely on the other side of how the market reacts and also what the talking heads are shouting so I can be a little bit more objective. And also, here's a funny little part of it that is a big part of it psychologically for me.

Starting point is 00:14:50 It also helps me reduce how much importance I put on a single 90-day-ish period of results for companies that I intend to hopefully own for multiple decades in many cases. Jason, I just can't tell you how many times I've seen a stock. It makes a big move after hours, after it releases its earnings. Everybody talks about the reason why it's making the big move. Then overnight happens and regular trading starts. Suddenly, the stock moves in completely the other direction. It's zagged back. Everybody who was talking the previous night is scurrying to try to figure out, okay, do I just change the headline from down to up? What explanation am I

Starting point is 00:15:37 going to find for why it's up when I gave such a great explanation for why it was down last night? And it's just one of those things that your approach, it helps to avoid that whipsaw. All that short-term madness plays out, and then you have the actual story in a longer-term context, which is exactly what you want in the first place. So, Jason, I'm curious. For me, time just rushes by, and I think there's such value in your strategy of waiting to review the report. But I saw a company report this morning.

Starting point is 00:16:12 I could have sworn they just reported last week. It turns out it's already been three months. How do you remember what's your prompt to go back and how often do you do it? Okay. I'm probably not supposed to admit this, but I don't. And what I've learned 15 years of actively researching and buying stocks, if I miss a quarter, there's probably nothing that I missed is, is the hard cold reality. Part of my check for that though, is I always read the 10 case. I read the annual report every year. If you know what to look for, you don't have to read all two or 300 pages. There's maybe 25 pages that are important to read in a company's annual report. And if you're doing that, you're probably not

Starting point is 00:16:57 going to miss anything important more than if you see the stock is up or down a lot since the last time you really checked in. And then that's the signal to go pop the hood on the business, do some research and find out what's going on. Wow. I love that. There's probably a lot more value in what you just said than what I'm about to say, but a little habit that I've developed is just being willing to dollar cost average. And so this means buying very small stakes over a period of time rather than buying it all at once. Now there are studies out there. Mathematically, it makes sense. If you're going to invest in a company, just invest, just invest what you're going to invest. Dollar cost averaging doesn't necessarily make the most mathematical sense,

Starting point is 00:17:40 but sometimes I have a huge psychological hurdle, kind of going back to what Dan was saying with Dollar General. Sometimes I have a hard time just moving from the sideline into buying a stock. And I found that being willing to dollar cost average that first purchase just gets me in the game. And now I've overcome that psychological hurdle. And now I'm ready to invest maybe that fuller stake much sooner than I would have if I didn't have that first small little buy. Yeah. Ansel Adams is famous for having said the best camera to use is the one that you have with you. And when it comes to investing strategies, it doesn't matter what the perfect strategy is if it doesn't fit. And this is a perfect example of that. The research says one thing,

Starting point is 00:18:21 but then there's what works in the real world. And being willing to, for me, both average up and buy the dip, it works because if your focus is on the business first and last, then you're going to have a better outcome most of the time. Dan? So my turn to share, I am married and my wife and I, we largely keep our finances separate, especially with our investments. But we do have one significant joint stock account that I mostly manage. One interesting thing I have found is I do a much better job of leaving that account alone than I do my own individual accounts. And that joint account has performed better as well. It's good, I have found, to have kind of my own separate avenues for taking flyers on some

Starting point is 00:19:09 interesting trends, on some more speculative stocks. But that joint account has been really the core portfolio. And I found that having that portfolio be more balanced, be less sensitive to short-term moves, it's been a godsend, not just because it's done really well, but because it has also been sort of that core that gives me the freedom to take a little bit more risk elsewhere in the portfolio. As a married man, I can say that the judgment of my spouse is a wonderful incentive to behave more appropriately as an investor. It's funny that you mentioned that. In my personal experience, we have a taxable brokerage that I certainly meddle in less, and that's carried over to the education investments for our son. The same thing

Starting point is 00:19:58 has applied. And it's funny how those accounts have done quite well just because of the incentives to maybe behave a little bit more. In the same way, I'm really grateful for the Motley Fool's disclosure policy. All three of us have to disclose our positions. And so everything we do is happening somewhat publicly. And so that has been a huge booster for my own investment returns is knowing that if I do something that's not capital F foolish, it's going to show. And if, so if I make a trader move or a boneheaded mistake, yeah, it's going to be out there publicly. And so it does just keep you a little bit more on focus, uh, hanging onto the good investment principles. And so I like what you're saying, Dan, Dan, John, I really appreciate you

Starting point is 00:20:44 guys coming on, being willing to share your mistakes and how they've led to successes. This has been a great show. Thank you, Jason. Have a great New Year. Happy New Year to both of you and all of our listeners. Hopefully, you have a very successful 2026 and well, well beyond. Just remember, as always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisers are sponsored content and provided for informational purposes only. To see our full advertising disclosure,

Starting point is 00:21:23 please check out our show notes. For Jon Quast, Dan Kaplinger, the entire Motley Fool Money team, I'm Jason Hall. We'll see you tomorrow.

Motley Fool Hidden Gems Investing - Investing in 2026: A Plan You Can Stick With

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