I had a couple of stark reminders why most individual investors underperform the market this week. One of the sales guys at Benzinga has been chatting with folk who didn’t renew their Banking on Profits service to see why not. The general consensus was that I was sending too much information and not enough actionable ideas. For those of you who don’t subscribe each week I send out commentary about the markets, economy and banking industry along with a buy list. That’s simply those stocks in the portfolio that are still cheap enough to buy at current prices. There no technical level or any of that. The list doesn’t change much week to week and we tend to hold the stocks for a very long time. Most of our exits are the result of a takeover offer.

We are beating the pants off the overall market but we don’t trade enough for most folks. They want the action, the chart points, the in and out and whip around. I don’t do that. I never will. It doesn’t work for most individuals and to think that you can take on professional full time traders and win requires the same arrogance to think that you and 8 buddies can take on an MLB All-Star team in baseball and give them a run for their money. Now, you and 8 of your buddies from work may be able to beat their pants off in Trivial Pursuit of Pictionary so if you are going to play them in a game, you play the one where you have the advantage. That’s what focusing on deep value and community bank stock investing accomplishes. We have the time and size advantage that gives us the opportunity to win. The game is about making money, not “action”. Studies and reality have proven over the years that “action” is toxic for results.

Last Saturday I gave a talk about bank stock investing and talked about the fact that if you paid close attention to valuations along with a rigorous reading of the Beige Book and FDIC Quarterly Banking Profile reports you should be able to avoid most of the industry’s occasional downturns. At the heart of it all community banking is not a complicated business and you can see problems coming in the economy and the industry coming from a long way off. In addition there is a pretty well defined valuation to buy and one where it starts to make a lot of sense to sell. I was immediately asked if there was some indicator that investors could watch to avoid all that time consuming and boring reading. The answer is no, there is not. Yu can either read or pay someone like me to read it for you. Even then I am going to lift out the important parts and suggest you should read over them so you have a view of what is going on with your world and your money. There is no magic chart that solves all your problems at a glance. You have to do the work.

Keep in mind we are talking reading and thinking not digging a tunnel through miles of rock or rowing a fishing boat around the Horn of Africa. It is something we can all do and you won’t miss too many hours of television to have to skip too many happy hours to get it done.

There is no easy path to stock market success. You can’t look at a chart that will tell you what to buy and sell each day. Making money take s effort in the market just as it does in any money making endeavor. Yes, some folks hit the lottery but for most of us making money takes effort. It takes time as well. It takes patience and discipline but if you do the work up front your big money is going to be made by what Charlie Munger calls sit on your ass investing. I would rather buy a bank at 85% of book value and sell it in a year or two for 150% of appreciated book than trade in and out of the market trying to catch a point or two every day. My way is less stressful, has lower risk and is far more profitable.

The path to stock market success is simple but not easy. Read, Think, Buy Right, Wait and Prosper.