Invest Like Nate Silver

by Marc Bastow | November 8, 2012 8:45 am

Nate Silver[1]All hail The New York Times FiveThirtyEight[2] blogger Nate Silver, the gimlet-eyed quant whose relentless focus on statistics and trends[3] provided his followers a remarkably accurate reading into Tuesday’s presidential election results.

How accurate? He correctly predicted the outcome in all 50 states.

Silver made his calls based on the nuts and bolts of campaign polling data, avoiding the pitfalls of outside noises from detractors and pundits screaming in his ears about his methods and conclusions. Indeed, his laser-like focus on the old blocking-and-tackling fundamentals should serve as a primer on how to put together a stock portfolio: Dig through the numbers and find the gems that can lead to long-term investment success and profit, and avoid the high-flier names where gut instinct rules.

Like Silver, investors also need to do their own grunt work of research and let the facts and figures inform your thinking. That especially goes for anyone looking for safe and diverse retirement income.

If your friends and family tell you that everyone loves Green Mountain Coffee (NASDAQ:GMCR[4]) because they make Keurig coffee makers, or they can’t get enough of Chipotle’s (NYSE:CMG[5]) burritos, that’s all well and good. The stocks might pop for a while, but the fundamental analysis lets you ignore the noise and saves you some down-the-road heartburn.

And you don’t have to go it alone. You can start with investments that someone like Warren Buffett makes through Berkshire Hathaway (NYSE:BRK.A[6], BRK.B[7]) — names that  include Coca-Cola (NYSE:KO[8]), Walmart (NYSE:WMT[9]), IBM (NYSE:IBM[10]) and American Express (NYSE:AXP[11]). These stocks are longstanding dividend stalwarts, with solid balance sheets and sturdy business models. No place to get distracted with these guys.

Like Silver, keep digging for the details and data to find some new long-term winners.

I recently highlighted Lumber Liquidators[12] (NYSE:LL[13]) as an up-and-coming star, and InvestorPlace contributor John Kmiecik[14] joined me in touting this gem[15]. With the housing market coming back and the need for even more lumber in the future along the battered Atlantic coastline, now may be a great time to follow the data for LL.

Want to take the time to research and do the math on another long-term play?

How about a somewhat unloved and bruised Intel (NASDAQ:INTC[16])? InvestorPlace Editor Jeff Reeves[17] makes a very strong case[18] for the chipmaker as a part of your portfolio, both because of its strong business model and for the solid 4.3% dividend yield. Again, focus on the balance sheet and cash flows to find the value.

So be like Nate: Focus on the facts as they are presented through the data and research, and make your calls accordingly. Ignore the screaming headlines and think for yourself.

Marc Bastow is an Assistant Editor at As of this writing he is long INTC.

  1. [Image]:
  2. FiveThirtyEight:
  3. relentless focus on statistics and trends:
  4. GMCR:
  5. CMG:
  6. BRK.A:
  7. BRK.B:
  8. KO:
  9. WMT:
  10. IBM:
  11. AXP:
  12. Lumber Liquidators:
  13. LL:
  14. John Kmiecik:
  15. touting this gem:
  16. INTC:
  17. Jeff Reeves:
  18. a very strong case:

Source URL:
Short URL: