In a sea of red in 2022, here’s how I have beaten the market by 42 points in Q1

Lots of posts in r/investing and r/stocks about the downturn….it was a bad quarter for most though March saw an uptick…Lots going on….whether it is the software bubble that looks to have popped in October 2021, or the fallout from Russia's invasion of Ukraine, it seems everyone lost money. I'm telling you it doesn't have to be that way.

The Nasdaq is down 9% in 2022, the Dow is down 3%. First quarter in eight that the indices fell. Hell, Zoom is down 80% from its 2020 high! I can't tell you what will happen Monday morning or next month or whether Russia will completely be forced out of Ukraine, but what I can tell you is that there is a way to do better.

In my view, here are the keys to investing:

1. Get a diverse set of views. Read a lot of investing articles. Understand the fundamentals of the businesses you buy. Read the bullish articles AND the bearish articles. Stay off of YouTube generally and head to Seeking Alpha, Bloomberg, and others. At any price that you see, that's the price at which about half of the active dollars are selling and half of the active dollars are buying. Even if you feel strongly about an investment, there are lots of people who feel the opposite. Ask yourself – why do other people disagree with you?
2. Analyze your investments from a probability-based risk perspective. When you are considering an investment, ask what is the case for this stock to go up 30% in the next 12 months and how likely is it? What is the case for the stock to fall 50%? How do the fundamentals of this stock compare to other stocks now (Is the P/E or P/S ratio higher or lower than others?)? How do the fundamentals of this stock compare to the same stock five years ago? Nobody wins on every investment, but if you try to consistently buy UNDERVALUED investments with more than average potential to rise, you will make more money.
3. Diversify, diversify, diversify. Make sure you consider investing across different asset classes – stocks, real estate/REITs, fixed income – and different industries. DO NOT put everything in FAANG or in tech stocks, because that is a great way to lose your money over time.
4. Shoot for singles, not home-runs. I watch my portfolio every day, multiple times a day. At the end of the day I ask myself…based on the price and market changes, has my opinion of my investments changed? If I keep my investments (which is most of the time), it is because I made a decision that my thesis is intact. If a stock has seen a big run, I'll take some off of my investment. If a stock is down a lot, I'll add some if I still believe in it. In my personal experience, I rarely see 100% returns on a given stock in year – almost never. I am looking for 0.1% 0.2% or 0.3% on my portfolio each DAY. Obviously, it doesn't happen like that but that is my mindset.
5. Only sell investments when they are having up days and only buy when investments are having down days. If you follow this rule every time, you will keep yourself from panic sells or buying when things are crazy.

Finally, for my own performance, how have I done +35% in 2022 through March 31 when the Nasdaq is down 9%? It's by investing in undervalued assets that the market hasn't been paying attention to. I basically NEVER buy tech stocks because their valuations are too rich and too many people talk about them. And this performance is not that new to me. Since 2012, I've done an annualized 31.2% after-tax, after-fee return compared with the Nasdaq 100 at 19.5% and Dow at 10.0% annualized return. Over that time I've returned 1,883% on my portfolio.

As of today, here are a few key investments to call out with upside relative to market expectations:

CLF (Cleveland Cliffs) – This steel producer had a great week this week as commodity prices are soaring. This stock trades at a forward cash flow multiple under 5 could see big further gains. Its had a big run recently, but still looks undervalued.

TRTN (Triton International) – This is a container leasing company that has been selling 12-year leases at huge returns to shipping companies around the world. With all the upheaval, this company benefits. If you're looking for a “subscription” type company at a low PE of around 6, this company is likely to generate a ton of return.

PARA (Paramount Global) – The media company, formerly ViacomCBS, is HATED by some, but I love the transition to streaming and I believe there is room for four or five streaming players. The stock is turning around recently and the company is making good business decision. It is likely to be bought out by a big player in the next few years at a much higher valuation.

ELVT (Elevate Credit) – This small cap stock sells loans to near-prime customers. It trades at a dirt cheap valuation and looks poised to be very very profitable over next 12 months. Additionally, it recently resolved some long-stand litigation to its business model.

Besides these stocks, I also hold a variety of other stocks and asset classes including Preferred Stock, which acts as fixed income, bond futures, REITs, and cash.