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Opinion: This surprising investing strategy crushes the stock market without examining a single financial metric

Opinion: This surprising investing strategy crushes the stock market without examining a single financial metric

I simply ranked competitors in each industry based on customer love and then bet on the winner

  • 08.12.2021
  • min read

MarketWatch

Opinion: This surprising investing strategy crushes the stock market without examining a single financial metric

I am not a professional stock picker, but over the past decade my portfolio has beaten the stock market by a factor of three to one.

Unlike Peter Lynch, who advocated investing in the makers of products you love and who, in my estimation, stands out as one of the greatest of all stock pickers, I did not examine a single financial metric to build my portfolio. Instead, I simply ranked competitors in each industry based on customer love and then bet on the winner.

My portfolio has performed so well because the market undervalues the economic power of customer love. When customers feel loved, they come back for more and refer their friends. This is the economic flywheel that drives sustainable prosperity, and companies built on it generate surprising levels of profitable growth.

To measure customer love, I used the Net Promoter Score (NPS) that I created 20 years ago. It captures how likely a customer is to recommend a product or service to a friend or colleague. I relied on the market to incorporate all financial insights into the current stock price.

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Net Promoter®, NPS®, NPS Prism®, and the NPS-related emoticons are registered trademarks and Net Promoter Score℠ and Net Promoter System℠ are service marks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.