Evolving Investment Strategies: From Coffee Cans to Today’s Dynamic Market

A Nostalgic Look at Coffee Cans

Do you remember coffee cans?

Nowadays, people often head to Starbucks or use single-serve K-Cups, making it easy to forget that coffee cans were once a staple in many American homes.

Here’s what they typically looked like:

However, coffee cans were not just for storing coffee. They symbolized a unique method of investing in stocks.

Chris Mayer introduced InvestorPlace CEO Brian Hunt to the coffee can investing strategy, often attributed to investment manager Robert Kirby.

Kirby wrote:

The coffee can portfolio concept harkens back to the Old West, when people put their valuable possessions in a coffee can and kept it under the mattress.

This simple investing method had two main steps:

1. Buy quality companies with promising futures.
2. Hold your investments for years without selling.

In this method, you metaphorically store your shares in a coffee can, tuck it away, and avoid any temptation to check on it for decades.

Kirby’s coffee can concept was inspired by a real-life situation he faced in an investment firm with a client whose deceased husband had a stock portfolio.

After inheriting the portfolio, the client brought it to Kirby. He discovered:

I was amused to find that he had been secretly piggybacking our recommendations for his wife’s portfolio. Then I looked at the size of the estate. I was also shocked. The husband had applied a small twist of his own to our advice: He paid no attention whatsoever to the sale recommendations. He simply put about $5,000 in every purchase recommendation. Then he would toss the certificate in his safe-deposit box and forget it.

This hands-off approach turned out to be remarkably successful. While some investments were worth less than $2,000, the husband held several worth over $100,000, with one noteworthy investment in Haloid (which later became Xerox) valued at over $800,000. His long-term strategy worked well when coffee cans were prevalent.

The Need for Active Investing Today

Long-term investing remains a smart strategy for many investors. Many lose money by frequently buying and selling stocks out of fear or greed, succumbing to the temptation to check stock prices constantly.

Such mistakes have been costly in the past and continue to be today. However, the stock market landscape has changed significantly. For example, within the last decade, half of the top ten stocks in the S&P 500 have shifted.

The following chart compares the top ten stocks by weight in the S&P 500 from 2015 to now:

Notably, companies like General Electric, once a dominating force, have fallen out of favor, no longer ranking among the top fifty.

According to EY, stocks in the S&P 500 used to have an average lifespan of 67 years. While this once created an ideal environment for long-term investing, today, that lifespan has shrunk to just 15 years and is expected to decrease even more.

Investing with Strategy in a Volatile Market

Luke Lango recognizes this shift. He is still a proponent of investing early in high-potential companies and holding them for many years. Yet, he understands the growing market volatility and the reduced time frames for top stocks to remain relevant.

This insight led him to create an investment strategy called “Auspex,” aimed at providing stability despite market fluctuations.

Last week, Luke revealed the details of Auspex during The Auspex Anomaly Event.

Luke describes Auspex as:

The ultimate stock-screening tool. My team and I designed it to find the “best stocks at the best time.”

Auspex combines fundamental, technical, and market sentiment factors to identify the next month’s top-performing stocks.

Each month, Auspex scans over 10,000 stocks, searching for those with the highest strength and positive sentiment, pinpointing opportunities with the most potential.

Typically, Auspex identifies 5-20 stocks, which my team then reviews to formulate that month’s Auspex Portfolio.

Investors simply purchase Auspex’s recommended selections at the start of the month and hold them until the end, at which point they may either continue with their current stocks or switch to new ones based on the latest analysis.

This approach ensures that investors focus their wealth on top-performing stocks monthly without the guesswork.

Luke has tested this strategy live with his Inner Circle subscribers for five months, consistently outperforming the market during that time.

Even in November, when the S&P 500 rose by 5.7%, Auspex’s portfolio rose more than 8%, marking the fifth consecutive month of success.

While the traditional coffee can method remains a valid option, the fast-paced changes in today’s markets highlight the advantages of a systematic strategy designed to keep investments strong year-round.

Have a great weekend,

Luis Hernandez

Editor in Chief, InvestorPlace