Investment strategies come in all shapes and sizes, but few are backed by decades of market experience and a portfolio of inventions. As an investor since 1980 and a self-described “disruptive inventor,” David Munson Jr. has weathered multiple market cycles while maintaining a diversified approach. His background combines practical investment wisdom with an inventor’s eye for spotting value where others might miss it.
Finding Value Through Disruption
David’s combination of invention and investment shapes his entire strategy, creating a perspective that looks beyond market trends to find lasting value. His approach centers on identifying companies with genuine profit potential. “My number one ‘profit potential’ investing strategy is investing in game-changing profit,” he explains. This focus on substantive value rather than market hype has helped him avoid costly mistakes. “I’ve missed out on some big gains because the companies were fads that didn’t have any income, but many times those companies crash or are doomed to crash because they’re overvalued,” David points out.
This experience has taught him to look deeper than surface-level market movements. He advises looking for “companies that are not only making money now or have the potential to make money before you invest much money.” This focus on current or near-term profitability provides a buffer against market volatility while still allowing for growth.
The Power of Diversification
David’s second investment principle tackles a mistake that has sunk many portfolios: over-concentration. “My number two model is never over-invest. Always have a diversified investment portfolio, ideally of 20 or 30 different assets with a spectrum of how much you put in one asset based on how speculative it is,” he advises. This balanced approach allows for both safety and opportunity. “If you’re buying a money market fund, you can have 20 or 30% of your investment portfolio in the money market, earning money and being ready for a buying opportunity,” he explains. This liquidity strategy ensures capital is available when genuine opportunities arise.
When it comes to speculative investments, David recommends strict limits. “If it’s something speculative that has potential to be a thousand or the thousand for one, you shouldn’t put more than maybe a half a percent in an asset like that,” he cautions. This measured approach means “if it doesn’t work out, it doesn’t kill you. But if it does work out, it multiplies your net worth many times.”
Avoiding Market Fads
Perhaps David’s most valuable insight comes from his third principle: avoid chasing market trends after they’ve peaked. “The third point is don’t chase the fad. There are fad stocks that have gone up exponentially. That is not what you want to buy,” he warns. His reasoning is straightforward – purchasing assets after significant price appreciation means “a lot of the upside is already out of it.”
This advice feels particularly timely given current market conditions. “We’re seeing that in the market now with some of the big tech stocks that have done so well crashing and having the potential to go down dramatically,” he notes. Instead of following crowds into overvalued assets, David’s approach mirrors lessons learned from his father, who “boosted my portfolio dramatically during the seventies, which was a flat decade, not by buying the Dow, but by finding stocks that were undervalued.”
Being in the market since 1980 gives David perspective most investors lack. He’s seen bubbles inflate and pop. Watched “sure things” turn to dust. “Doing research, subscribing to good websites and newsletters, and taking them with a grain of salt is important,” he says. That last part, taking everything with a grain of salt, might be the most valuable advice of all. David sums up his philosophy simply: “Remember diversification and not chasing the fad is key to investment success.” Not exactly revolutionary, but proven through market cycles.
Follow David Munson Jr. on LinkedIn to gain more insights from his decades of investment experience.
