So, I was able to pick stocks that not

only beat the S&P 500 index over a time

period of well over a year, but also

outperformed the NASDAQ 100 index, which

has done even better than the S&P. And

if you're not aware, this is really hard

to do. And in this video, I'm going to

show you exactly how I did it, including

which stocks I bought and the exact 12

gate strategy I've developed over the

last 15 years that I use when I'm trying

to figure out which stocks to buy. Now,

really quick, if I were you, my BS

detector would immediately start going

off right now. So, let me just diffuse

it really quick by saying there's not

going to be any upsells at all in this

video. I'm not selling you anything. I

will never try to sell you a course on

finance or investing. I'm just sharing

what's been working for me personally

cuz it's fun and it's a super simple

strategy. But really quick before we get

started, super duper important legal

disclaimer. I'm not a licensed or

certified financial adviser. Nothing in

this video should be considered as

financial advice. This video is for

entertainment purposes only. You should

always make sure you talk to a certified

financial adviser before making any

financial or investment decisions. I'm

just sharing what's been working for me

personally, but I'm definitely not

advising that you follow the same

strategy. Past performance does not

guarantee future results. Whenever you

invest, your capital is at risk. All

right, let's get into it. So, how

exactly did I track the performance that

you're seeing on the screen here? I've

actually had a bunch of stock picks over

the years that completely blew the index

funds out of the water, like Tesla and

Build-A-Bear, because it turns out that

kids love overpriced stuffing and

capitalism. But it was hard to get

concrete comparison figures because for

the last 15 years, I'm always dollar

cost averaging and buying up more stock

every week and different stocks get

bought at different times. So what I did

was when I left my job, I did a rollover

from my employer's retirement account

into a brand new IRA account. And in

this new account, I bought all these

different stocks and index funds at the

same time because I thought it'd be fun

to track how the stock picks do against

the index funds. My wife thinks I need

better hobbies, but I just tell her that

spreadsheets are my love language. And

at the time of this recording, well over

a year later, the individual stocks are

outperforming the S&P 500 and NASDAQ

index funds pretty substantially. So,

here's the strategy I use. Basically,

what I do is whenever I'm thinking about

a stock that I might want to buy, I run

it through these 12 gates of analysis,

and if it passes all 12, then I buy it.

So, let's dive into it. Here are those

12 gates. Game number one is, can I say

with an extremely high degree of

probability that the industry that this

company's in will still be equally

relevant in 50 years? And I say 50 years

cuz this strategy is very much like

Warren Buffett style, Benjamin Graham

style value investing. The general idea

is to buy great companies and to hold on

to them for a very, very, very long

time. It's like the financial equivalent

of slow cooking a brisket. So when I'm

looking at the industry, I think about

stuff like does this industry have a

strong timeless cash generating business

model? Is the volume of customers in

that industry going to remain high? Are

the profit margins in that industry

going to remain high? So here are some

examples of industries I like. Banking.

So banking's existed, I'm pretty sure,

since before humans evolved from chimps,

and I think it'll always continue to

exist. There's so many important

services they provide like retail

banking, cash management, commercial

banking, nearly collapsing the global

economy, investment banking, advisory.

These are all timeless services that I

think will pretty much always be needed

no matter what. So, I've been buying up

some of the bigger players in the

industry when I can get a good deal on

them, like JP Morgan, Goldman Sachs, and

SoFi. Again, this is not investment

advice. It's just what I've personally

been buying. I also really like the

chips industry. I think the world's

becoming more and more digital every

year where more and more compute power

is going to be needed and I don't really

see that changing. Like demand might go

up and down in the short term from year

to year, but overall I think in 2030

years there's going to be a lot more

demand for chips than there is today.

Also, Doritos are really tasty. So, I've

been buying up a ton of Nvidia and AMD

since around 2021. They've easily been

some of my best performers, but I

actually didn't buy any in this rollover

account since I already own so much. And

because when I did this rollover, Nvidia

was already skyrocketing in price. So, I

felt comfortable with a position I

already had and I didn't want to

overpay. But if I did add Nvidia and AMD

to this portfolio, it would have

outperformed the indexes by a much wider

margin. Now, an example of an industry

that I don't like is the taxi services.

So, I'm not buying any stock in like

Uber or Lyft. Cuz you got to ask

yourself, at some point in the next 50

years, will robo taxis replace human

taxis? I don't know, maybe. But I

definitely can't say for sure that Uber

and Lyft won't lose a huge portion of

their business to robo taxis. So I'm

just avoiding that industry altogether.

I also don't particularly enjoy riding

in cars that come with equal parts

oxygen and Fbreze. Now that doesn't

necessarily mean that Uber andyft are

bad stocks or that they'll definitely do

poorly. Like I know Uber and Lyft are

both working on some type of robo taxi

solution and in some cities they even

partner with robo taxi options like

Whimo, but is it possible that companies

like Whimo will eventually just cut out

the middleman? I'm just personally not

confident enough in them to add them to

my own portfolio. Because you got to

remember, every stock you buy has an

opportunity cost because that's money

that could be used more effectively

somewhere else, like investing in

something that's more likely to perform

better or on the therapy you'll need

when you lose all your money after

watching my YouTube videos. All right,

here's gate number two. I say a little

prayer at my altar of the legendary

investor, Nancy Pelosi, to seek wisdom

and spiritual guidance from the greatest

investor to ever grace the earth. If I

feel like she's smiled upon my

investment idea and has given me her

blessing, I move on to gate number

three, which is can I say with an

extremely high degree of probability

that this company will still be a leader

in its industry in 50 years? And to

figure this out, I'm looking at things

like what do the barriers to entry look

like for this business model? Like how

hard is it for new competitors to

appear? Does the company have any unique

competitive advantages and how hard is

it for others to catch up with those

advantages? How well positioned is the

company to pivot if there's changes in

the industry? How much of vertical and

horizontal integration does it have?

Who's on the management team of the

company? Does it have the ability to

attract the smartest talent? And

basically the final sort of litmus test

here is if a group of investors were to

give me a huge amount of money today

like a hund00 million would I be able to

start a serious viable competitor to

this company within a few years where I

could take like 15 to 20% of the market

share or would it just be way too

expensive and complicated because of all

the details I'd have to figure out like

technology logistics infrastructure

scale managing the HR complaints filed

against me customer acquisition overhead

costs regulatory challenges building and

scaling teams that would need to be

coordinated efficiently, things like

that. So, what are some companies I like

that are good examples of this? I really

like Marriott and Hilton. Again, this is

not financial advice. This is just what

I personally like for me. When it comes

to hotels, these companies are just

massive. Like, for pretty much any

location you want to travel to, you can

usually count on there being a Marriott

or Hilton. Legend has it that every

Marriott bathroom actually has a secret

passage leading to another Marriott,

which is how they keep their occupancy

up. And because of this, they were able

to make these really enticing points

programs for business travelers. So for

like six years at my job, me and my team

of a dozen people would fly to the

client site every single week, Monday

through Thursday, and we would always

stay at either Marriott or Hilton

Properties because it let us build up

loyalty status and points that we can

then use for free vacations, room

upgrades, stuff like that. And there's

thousands and thousands of other people

just like that. Business travelers are a

huge, highly profitable customer base.

the amount of time and money and effort

it would take to try to build up a

portfolio that's big enough to compete

with Marriott and Hilton and to do it in

a profitable way and then to build out

the points and loyalty program and then

to try and convince these business

travelers to move away from brands where

they've already have lifetime platinum

status like that's going to be harder to

do than trying to convince your niece

that she's in a cult and needs to call

her dad. It's not a problem you can just

throw money at. You know, there's no way

for a couple of Silicon Valley tech bros

to vibe code their way out of this one.

Now, an example of companies I don't

like based on this gate is like clothing

brands. Like, yeah, of course, the

clothing industry is always going to be

around, but brand popularity is fickle

and that changes over time. What's

popular today might go completely out of

fashion in a few years, and the barriers

to entry are super low. Like, a startup

brand with a really good influencer

marketing campaign could go viral really

quickly. Game number four is I tweet at

Nancy Pelosi asking if this particular

stock is a good buy. Now, she hasn't

explicitly told me this cuz I've never

met her, but I personally believe that

we have an unspoken rule that silence is

agreement. So, as long as she doesn't

actively tell me no, I move on to gate

number five, which is how solid are the

company's financials? Is this company

profitable? Or does it at least look

like they'll hit profitability in the

foreseeable future? Are they trending in

the right direction? Are their margins

improving over time? What does their

debt situation look like? So, here's how

I analyze this type of information. I'll

use Costco stock as an example because

it's one of the stocks in my portfolio.

Again, this is not financial advice. I

just have a crippling addiction of $150

hot dogs, which happened to be the only

food I could afford after my stock picks

from 3 years ago brought me within a

hair's width of bankruptcy. All right,

so what I do is I go to

finance.yahoo.com.

I put in the ticker symbol of the stock

I want to analyze up here, and then I

click on the financials tab over here on

the left. And this is going to show me

the three important financial statements

of any company. the income statement,

the balance sheet, and the cash flow

statement. Here on the income statement,

I'm looking at things like total

revenue, which we see is going up

consistently every year, gross profit,

which we see is also going up every

year. And this is basically their

revenue minus their cost of goods sold,

or the price they pay for inventory. If

we then subtract out all of their

operating expenses, like employee wages,

we get operating income, which we see is

also going up consistently every year.

And then if we want to see their total

operating earnings before taking into

account things like interest, taxes,

depreciation, and amortization, we can

look at this EBIT DA row over here,

which we also see just consistently goes

up every single year. Over on the

balance sheet, I like to look at a few

things too, like cash and cash

equivalents, which shows how liquid the

company is. I don't really care if this

number goes up every year. I just want

to make sure that it's at a steady,

healthy level and that the company isn't

just burning through its reserves. I

like to look at total debt to make sure

it's at a reasonable level relative to

the size of the company and that it's

not skyrocketing every year. Bonus

points if we see that it goes down every

year like we see how Costco is doing.

And over on the cash flow statement, the

main two things I usually look at are

operating cash flow and free cash flow,

which is just operating cash flow minus

capital expenditures like property and

equipment. For both of these, I love to

see predictable cash flow and consistent

growth in the right direction, unlike my

dating history, which is more of a

volatility play. So, these financials

look excellent to me, and with how well

Costco passes all the other gates with

its massive barriers to entry and

recession proof business model, it's

honestly just one of my favorite stocks

that I'll hold on to forever. Gate

number six, I write Nancy Pelosi a

handwritten letter asking if the stock

is a good buy. Dean Nancy, I wrote you,

but you still ain't calling. I left a

message on your phone pager and I

stormed the capital. Just like with the

tweet, I assume that silence is

acceptance. Gate number seven. Is the

company trading at a fair price or is it

currently in a hype bubble? When I look

at price, the share price means

absolutely nothing to me. The only thing

I care about is the market cap, which is

the total value of the company. If you

don't understand why, you can check out

some of my other videos on personal

finance basics. Now, you can get really

fancy here to figure out a fair

valuation for the company, like running

discounted cash flow models, free cash

flow projections, industry multiples

analyses, or asking your old friend

Steve from the finance department to

give you some insider information. Just

kidding, that's illegal. I'm not going

to go too deeply into those in this

video cuz honestly, I I don't think

anyone outside of banking or the

investment industry is realistically

going to do it. But if you're lazy like

me, uh some easy metrics I like looking

at are uh the PE ratio, which is the

company's share price relative to its

earnings per share. I like to look at

how that PE ratio has trended over time

using websites like macro trends, uh and

how that PE ratio compares to other

competitors in the industry. As a super

basic rule of thumb, if the PE ratio is

really high or it's high compared to

what it was historically, or it's high

compared to its competitors, that could

mean that the stock is expensive. If the

PE ratio is low, that could mean that

it's a good price. Now, I always take

the PE ratio with a huge grain of salt

cuz it doesn't take into account all the

most recent details. Like if Little

Suz's lemonade company made $100 million

last quarter, but a news article comes

out this morning that Little Suzy has

been purposely adding a drop of

lististeria to every thousandth bottle

of lemonade cuz she's a psychopath. the

stock price and therefore the PE ratio

is going to go super low. But that

doesn't necessarily mean that it's a

good buy because even though let's say

the PE ratio goes all the way down to 1,

it has that cheap valuation because the

market is expecting that sales are going

to drop by 99% when the financials are

released again next quarter and little

Suzie is going to be sitting in federal

prison. So the PE ratio is just one

variable out of many that I like to

consider. As a general rule, I don't

really like investing a ton into

companies trading at pees in like the

200s or 300s. I might still invest a

little bit just to get a little exposure

just in case for fun. Uh, but I never

move like a large sum of money all at

once into a company like that,

especially if everybody else is doing it

because of all the hype and excitement.

And I feel like that's a super common

mistake a lot of people make. Like they

hear a bunch of hype about a stock on

the news, so they just yeet half their

life savings into it because they feel

like it's a sure thing. Even though the

price has gone up 150% in the last month

and it's trading at a 400 PE ratio.

Historically for me, every time I got

caught up in hype like that, it's

typically resulted in me getting a bad

deal or losing money because eventually

the stock price corrected down to a more

realistic valuation when the hype dies

down. Now, on the flip side of the

situation, I get really excited when

there's a lot of irrational fear in the

market. when people start thinking the

sky is falling where all the panic makes

a really healthy company's stock

irrationally drop like 20 to 50%. Or it

just becomes an insanely cheap bargain.

There's a really well-known quote in the

finance world that goes, "Fortunes are

actually made in bare markets. They're

just collected in bull markets." I give

a few real world examples of this in my

video summarizing the book, The

Intelligent Investor by Ben Graham. I'll

leave a link to it in the description.

Gate number eight. I download the

publicly available transcripts of every

time Nancy Pelosi has ever publicly

spoken on record and I feed those

transcripts into a custom chatbot. I

then instruct the bot to act as Nancy

Pelosi and advise me if my thinking on

the stock trade is valid. Gate number

nine, I carefully think about what are

all the major risks this company faces

and how well is it positioned to handle

those risks. A lot of people fail at

this cuz most people don't actually know

how to think. The only way to properly

think about anything, whether it's

related to investing or something

totally different, is whenever you're

forming an opinion on something, you

need to be disciplined enough to take at

least like 15 minutes where you just go

full-on method acting mode and

pretending that you're a lawyer that has

to argue for the opposing side, where

you spend that 15 minutes researching

all the facts you need to build a case

for why your original opinion is wrong.

If you don't do that step whenever you

have to form an opinion on something

important, then you're not actually

thinking. You're just a willfully

accepting your fate as a victim to the

confirmation bias parasite lodged inside

your skull suckling on your dendrites

like a calf to a teet. You can pretty

easily start your research on the risks

by just typing the name of the company

to Google followed by the words investor

relations which will bring you to a page

where you can download the company's 10K

annual report which is a document that

every company publicly traded in the

United States is required to put out

annually. The 10K includes a lot of

really useful information like details

about the business operations that you

might not even know about, the risks the

business is currently facing, the

financial performance of the company,

and a ton of other goodies. But since

I'm illiterate and I have a hard time

reading dry documents like this, what I

like to do instead is to just use

ChatGpt's deep research functionality

and give it the following prompts. Can

you give me a detailed summary of all

the sections from company XYZ's most

recent 10K annual report providing a

deeper dive into important areas like

financials, risk factors, and business

strategy? If you want to achieve a level

two sage status, while you're reading

the analysis of the 10K filing, you can

have Chad GPT's deep research work on an

additional prompt that looks like this.

expanding your research past just the

10K, can you give me even deeper

industry insights into company XYZ's

business risks, competitor analysis,

industry trends, and general

projections? I would like both a

short-term and long-term perspective, a

global view, and the insight should be

segmented by business area. If you want

to achieve level three Nancy Pelosi

status, you can do the same process for

the company's main competitors to get a

well-rounded understanding of the

industry. Now, if you think that there's

essentially no real risks and that your

investment idea is a 100% slam dunk

case, then I'd like to introduce you to

the Dunning Krueger effect, which is

backed by a ton of scientific research.

And it shows that when somebody learns

the absolute bare minimum about a topic,

like 1% of what there is to know, their

confidence level shoots to 10,000%. And

then once they learn like 2% about that

topic, their confidence tanks to

negative a billion because they realize

how little they actually knew in the

first place. And then it takes a lot

more learning and time to get back to

decent confidence levels. This is

probably the most important graph you

could ever memorize. Cuz if you ever

have to make a really big decision and

you're just feeling 10,000% confident

interview pretty quickly, then following

that gut level overconfidence is a great

way to permanently ruin your life. Gate

number 10 is I like to attend Warren

Buffett's annual shareholder meetings in

Omaha, Nebraska. And I like to sit right

by the exit so that as soon as it's

over, I can catch him in the hallway

after the event and ask him if I can get

Nancy Pelos's phone number so I can call

her for some investing advice. Now,

really quick, before the last two gates,

there's two important portfolio

management strategies that I always make

sure to follow. The first is that even

with all of this analysis, it's still

really hard to beat the index funds.

Diversification is really, really

important. So, I still make sure that at

least half my portfolio is invested in

index funds so that I have a solid

buffer. And when I just started

investing 15 years ago, index funds were

closer to like 80 to 90% of my

portfolio, which I'm really happy about

cuz I made a lot of really stupid stock

picks early on. And the second thing I

like to do is make sure that no single

stock ever exceeds more than like 5% of

my total portfolio, no matter how

confident I am, especially since I

probably already have some exposure to

that stock in my index funds anyway.

Because no matter how much research and

analysis you do, you can't predict

everything. Like a news report could

come out tomorrow that a huge scandal

was uncovered where the company you

bought stock in was fraudulently opening

up 27 extra accounts for their customers

without their knowledge. Or maybe the

CFO starts tweeting cryptic messages

like taxes are for cowards before

fleeing the country on a jet ski in the

middle of an earnings call. You just

don't know what you don't know. Here's

the oneliner that I always tell myself

to keep me grounded. I never want to put

myself in a position where a single

wrong decision can financially ruin me

because I know for a fact that I'm going

to be wrong more than once. All right,

let's wrap up the last two gates. Gate

number 11 is the worst case scenario gut

check where what I do is I literally

visualize that I just bought a ton of

this stock last month and then today the

stock is trading at 30% lower than what

I bought it for and nothing has

fundamentally changed about the

business. It's like they didn't pivot

away from making toilet paper to start

manufacturing cell phones like Nokia

did. It's true, by the way. You can look

it up. If that stock price tanks, am I

going to be sweating from nervousness or

am I going to be excited cuz I can buy

more stock at a huge discount? If I

think that realistically I'm going to

fold like a paper napkin from a 20 to

30% drop, then I don't buy the stock.

But the main rule I follow here is I

never buy a stock just because its price

dropped 20 to 30%. I only buy it if I

was going to buy it anyway based on the

analysis from all the other gates. I

just happen to buy even more because of

the dip. Warren Buffett has a really

great quote on this where he says, "It's

far better to buy a wonderful company at

a fair price than a fair company at a

wonderful price." And the final gate,

gate number 12, is I performed the

ritual outlined in the ancient texts

found in the archaeological ruins of the

most wealthy and prosperous civilization

known to the history of humanity, the

lost citystate of Nancia Pelosia, which

dictates that if I want to acquire good

fortune in the realm of gold, then I

must not only subscribe to this YouTube

channel, but I must also hit the bell

icon to get notifications, which you're

going to want to do cuz I'm coming out

with a video really soon that'll analyze

every single stock in Nancy Pelosy's

portfolio in detail.