Find Fat Fish

After six years of putting all my money into one stock at a time (and taking my dad's  "Concentrate to create, if you're a young man; diversify to protect, if you're an old man" advice to manic-depressive extremes), this is my main takeaway:

Don't risk so little you don't care, but DON'T risk so much you can't sleep.

If you risk so little you don't care:

You won't be hurt if the investment fails, but you will be haunted if it succeeds. At the same time, buying 1 share of a stock makes significantly more sense, and will yield a significantly better result, than staking 50% of your net worth.

If you risk so much you can't sleep:

You will be scared shitless all the time, and it will be impossible for you to exploit your main advantage as an amateur — holding forever, if you want to — because you will feel compelled to panic-sell whether the stock goes up ("Lockin' my gains!") or down ("Cuttin' my losses"), paying needless amounts of taxes and playing into the hands of dangerous competition that you could otherwise avoid.

A painful way to make this point:

Stocks I bought for the long-term but sold because I panicked, that I would KILL to still be holding (in ascending order of painfulness):

Google aka Alphabet (GOOG), up almost 500% since I bought in late 2008.

Apple (AAPL), up almost 800% since I bought in late 2008.

Facebook (FB), up more than 500% since I bought in mid-2012.

Netflix (NFLX), up almost 1,300% since I bought in early 2010.

Amazon (AMZN), up more than 1,400% since I bought in late 2008.

While we're here, do NOT be intimidated by percentages. Just keep the numbers rounded: 

A 100% gain turns $1,000 into $2,000.

So a 200% gain turns $1,000 into $3,000.

Therefore a $300% gain turns $1,000 into $4,000, and a 1,300% gain turns $1,000 into $14,000.

Squandering opportunities to turn every $1,000 that I had ALREADY invested into more than $15,000 by simply doing NOTHING, makes me NEED to tell you, that if you want to succeed as an investor, and to transform your worth with Fat Fish, then DO THIS AND ONLY THIS:

Pick your perfect company.

Confirm the company's ferocious.

Invest 1 Month of Expenses (or less).

Hold until it is worth 1 Year of Freedom (or more).

Find at least five Fat Fish in this fashion, so that you will more than double your investment in these companies if even one of them pans out.

And when in doubt, start with less.

Because as a friend of Find Fat Fish once said, "You can always add more but you can never add less, ya dig?" (He was discussing hot sauce, but this is sage for stocks too.)

Nintendo (NTDOY) is up 74% from our March recommendation. Here are 3 face-melting reasons why co-owning this company will probably turn 1 Month of Expenses into 1 Year of Freedom, if you buy-and-hold.

1. Nintendo will probably grow users and profits for the foreseeable future (multiplying NTDOY over the long-term).

Nintendo plans to release five mobile games by March 2017, including Super Mario Run today. The Wii, Nintendo's most successful system, reached 100 million homes; smartphones are estimated to hit 6.1 billion users by 2020. So, as of this morning, Mario's addressable audience just leapt from millions into billions.

Nintendo will also release a new system in March, called Switch, that combines their portable and at-home consoles into one machine. So, three months from now, this business looks completely different than it does today.

2. Nintendo will almost certaintly not go out of business (so NTDOY won't drop to zero).

Nintendo co-owns an app that grew a larger U.S. user base than Tinder and Twitter in one week, that has proven so nostalgic and addictive that people can't stop playing while they're driving and end up crashing into cop cars. And looking beyond Pokemon, Nintendo owns the most lucrative library of characters in entertainment's fastest-growing industry.

3. Nintendo is viewed with unsustainable pessimism (expanding NTDOY's protection and propelling its potential).

Despite the recent Pokemon pop, NTDOY is still down 57% from its November 2007 peak. This situation is sexily similar to where Nintendo was in 2006 (when Find Fat Fish invested heavily after reading about the Wii): An innovative idea following an idiotic idea. Millions of disgruntled fans, impatiently awaiting its arrival. Unsustainably pessimistic investors, assuming next year looks like this year. A battered-but-not-broken company that will probably shock the world, again, and will not go out of business.

We live in the age of mobile, and in the age of the sequel. Nintendo possesses, and has not yet exploited, the most beloved franchises in a $99.6 billion industry that is growing rapidly. Ten years from now, twenty years from now, with their best-selling brands in front of 6.1 billion smartphone subscribers for a prolonged period of time, do you really think Nintendo has any chance of being less lucrative or less relevant than they are today? More specifically: When Nintendo announces, then releases, a smartphone version of Mario, Mario Kart, Metroid, Donkey Kong, Pokemon, Star Fox, Kirby, Zelda, Punch-Out!!, Duck Hunt, Brain Age, Sports Resort, or Smash Brothers: do you think users (then profits, public perception, and stock price) will trend downward, or upward?

So, if you love Nintendo's future, they are the perfect starter stock.

For further, more detailed information, check out The Marvel of Mobile: Why Nintendo's Move To Mobile Leads To NTDOY's Return To Stardom As A Stock.

Performance (as of December 14th, 2016): At $30.35, NTDOY is up 74% since first recommendation, beating the S&P 500 by 57%.

Disclosure: Find Fat Fish owns shares of Nintendo (NTDOY). We did not receive compensation for this article, and have no business relationship with any company whose stock is mentioned.

Disclaimer: You are responsible for your own investment decisions, and we are not liable for any errors or omissions. For more information, consult Find Fat Fish's Terms of Use.

This post first appeared on Quora, answering "What is the most aggressive way to invest 70,000 dollars today with acceptable risk?"

$70,000 invested in Netflix (NFLX) in September 2012 is worth more than $770,000 in August 2016.

And there was no chance of that investment dropping to zero, unless you really thought Netflix was going to go out of business (which, if you listened to the first 15 minutes of any of their conference calls, or read Reed Hastings' Long-Term View, was not a realistic threat).

A risk/reward ratio better than 10-to-1 should quality as "aggressive" for the most rapacious capitalist, and as "acceptable" for the most risk-averse survivalist.

But how do we deconstruct that investment to find more opportunities just like it?

Find Fat Fish specializes in finding investments—and in helping aspiring investors find their own investments—that meet these three criteria:

The business will almost certainly not go out of business (so its stock won’t drop to zero).

The business will probably grow users and profits throughout the foreseeable future (multiplying its stock price over time).

The investor uses the business’ product constantly (so they do not risk misinterpreting the business opportunity, or of getting bored with the investment and selling far too soon).

(And we have created an Imbalance Sheet that condenses this thinking to one page.)

Looking to the future, a couple examples to consider:

95% of takeout and food delivery is still done with paper menus and phones. GrubHub (GRUB) has a plan to increase Gross Food Sales from $2.4 billion to more than $245 billion, and looks a lot like The Netflix of Food.

85% of the world’s commerce is still conducted in cash, and PayPal (PYPL), which owns Venmo, is the company with the most experience and focus in creating the digitization of the dollar.

Video games have grown larger—and are growing so much faster—than movies; and Nintendo (NTDOY) is the only video game company with a library of franchises that is Disney-level loved.

But investing is an art form that is rooted in your interests, so more importantly, you tell me:

What products or services have you used more this year than last year, and way more this year than two years ago?

Do you believe that business has enough Protection to ensure the business won’t go out of business (so its stock won’t drop to zero)?

Do you believe the business has enough Potential to probably grow users and profits throughout the foreseeable future (so its stock will multiply over the long-term)?

If you find companies that have these elements, you’ve found effective—and enjoyable—investments that are “aggressive” and “acceptable.”

Just take care not to over-invest in one stock. Don’t buy what you can’t hold.