In the realm of finance, where dynamism often takes center stage, Eddy Elfenbein, a seasoned finance blogger, has silently and consistently outpaced industry titans Warren Buffett’s Berkshire Hathaway and Cathie Wood’s ARK Invest since 2018. The secret behind this remarkable feat lies in Elfenbein’s unconventional yet effective strategy for his AdvisorShares Focused Equity ETF, recognized by the ticker CWS, boasting an impressive 110% return compared to Buffett’s conglomerate with a 74% return, and Wood’s Innovation Fund with a 45% return during the same period.
Elfenbein’s strategy is elegantly simple – at the start of each year, he meticulously crafts a 25-stock “buy list” for his ETF and then refrains from any alterations for the next 12 months. This ‘set and forget’ approach has not only defied conventional wisdom but has propelled his ETF to surpass the performance of industry giants, capturing the attention of both seasoned investors and curious readers.
In a recent interview on Downtown Josh Brown’s podcast, “The Compound and Friends,” Elfenbein, also known for his Crossing Wall Street blog, shared the genesis of his strategy. The “buy list” tradition started in 2006, and the ETF was launched in 2016 in response to the growing interest from readers who sought to align their investments with Elfenbein’s unique approach. The strategy involves minimal intervention – only five stocks may be swapped at the start of each year if deemed necessary, maintaining a disciplined and steady course.
As Elfenbein humorously puts it, “We’re as lazy as possible. That’s the goal.” The underlying philosophy is to demonstrate that successful investing doesn’t require constant trading or chasing well-known growth stocks. Instead, a seemingly ‘boring’ portfolio, once set and held with discipline, can yield substantial returns.
Approaching the $100 million mark in assets under management, CWS follows an equal-weighted model, attributing approximately 4% to each stock in the fund. Elfenbein highlighted the average holding period of five years, emphasizing the importance of patience and a long-term perspective in navigating the ever-evolving financial landscape.
The current “buy list” features established names like Hershey, Intuit, Moody’s, HEICO, and Silgan, with some, including Aflac, standing the test of time in the fund. Elfenbein’s stock selection process centers on a fundamental question – “Is this something I’d be comfortable holding for an average of five years?” This question, as he explains, shapes the mentality around the stock, dividends, and the envisioned role of each investment.
The cumulative gain of 573% over the 18-year history of Elfenbein’s “buy list” surpasses the S&P 500’s return of 447% during the same period, further underscoring the efficacy of his unique strategy. This exceptional performance stands as a testament to the power of simplicity, patience, and disciplined investing, challenging the norm of constant market activity and stock shuffling.
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In conclusion, Eddy Elfenbein’s journey and his triumph over financial heavyweights highlight the potential rewards of a patient, disciplined, and ‘set and forget’ approach to investing. As investors navigate the complexities of the financial markets, Elfenbein’s strategy serves as an inspiration, proving that the path to success doesn’t always involve complexity and constant intervention. Instead, embracing a measured and patient approach, even with ‘boring’ stocks, can lead to remarkable and sustainable financial gains in the long run.