A Framework for Building Long-Term Wealth

The Story of Polaris Investing

Index Funds = Average Returns

Only a small percentage of Americans actively invest in the stock market. Most choose to settle on the sidelines and park their money in 401Ks, IRAs, and/or index funds that receive below-average to average returns at best. 

When they do decide to invest in individual stocks, they make their selections based on hot tips or hunches. Then, they are quick to reconsider, particularly when the stock market takes a downward turn. 

What these investors lack, according Daniel Crosby, author of Laws of Wealth, is clarity, courageousness, consistency and conviction.

There’s also this concept of value investing. Heck, most of the Polaris Team grew up in Omaha, Nebraska, literally in the shadow of the “Oracle of Omaha,” Warren Buffet. How could we not know that the secret of investing is to (1) figure out the value of something, and (2) pay less for it. As Warren is famous for saying, “price is what you pay, value is what you get.”

The team at Polaris searched high and low for an investment adviser or website that could provide us with a simple and easy-to-use tool built on time-proven principles of profitable investing. We came up empty-handed.

The Thoughtful Investing Tool

That’s when we decided to create one ourselves. Polaris is the result of over 10 years of research and testing into the fundamentals of stock market investing, and specifically, theories of asset valuation — what a particular company is worth at some future date. 

Polaris provides Clarity. It is straightforward and easy to use. Most investment advisors and websites throw a mountain of data at investors, using unclear or specialized language. In fact, many investment sites are merely news aggregators — pulling data and stories from many different sources and expecting the investor to make sense of it all.

We at Polaris believe that simplicity beats complexity! We rely on a few key financial and economic variables that have been shown to be at the heart of stock valuation. These include a company’s sales growth rate, profit margin and risk relative to the market. 

Using these variables, we first calculate a theoretical investment return. Then, using a propriety algorithm, we moderate the theoretical return, taking into consideration the stock’s current price, to arrive at a practical return.

Polaris provides courageousness. We know how emotionally hard it is to do the right thing, particularly during market downturns. And there will be market downturns — probably 10+ in your lifetime. 

With our unique Practical Buy/Sell Spectrum, we give you suggestions as to when to buy, when to sell and when to wait. By the way, unlike a lot of investment sites, we at Polaris think it is OK to wait on an investment decision. Which is we provide a Waitlist feature that allows you to easily retrieve stocks you are following.

Polaris provides consistency. It is a tool that can be used all the time; by providing a consistent and elegantly designed interface. In future releases, we will provide users with alerts indicating when a particular stock price has moved from Watch to Buy to Sell.

Polaris provides conviction. With our My Investment Plans page, you will be able to set a course of action and stick with it. Soon-to-be-released notifications will alert you when the stock price moves up and down the Buy/Sell Spectrum.

Think of it as a form of behavioral coaching. We try to prevent investors from making foolish decisions during times of market upheaval. Successful investing is not about beating others, but controlling oneself.

A Final Note

In our next blog, we’ll talk about the specifics of how to use the Polaris site to get off the sidelines and earn higher-than-average returns by making thoughtful investment decisions.

One of our favorite quotes here at Polaris is…

“When the short-term stock market rocks, sleep well knowing you have done the thoughtful thing.”

 — Paul Samuelson, Nobel Prize in Economics