Tags: Walia | motif | investing | transparency

Motif Investing Turns Bright Ideas Into Moneymaking Stock Picks

By Forrest Jones and Steve Cordasco   |   Wednesday, 24 Oct 2012 01:14 PM

Got a good idea about where to invest in stocks, but don’t want to get hit by fees that could eat away at what little returns the markets are offering these days? Consider Motif Investing, an online broker that pioneered so-called idea-based stock picking.

Motif Investing offers portfolios, or “motifs,” of stocks that focus on today’s issues.

You pick the idea in which you want to invest, such as healthy eating, tablet computers or even pets, and Motif picks the stocks surrounding that idea and returns follow.

“What we do is keep the focus on the idea,” Motif co-founder and CEO Hardeep Walia told Newsmax TV in an exclusive interview.

Watch our exclusive video. Story continues below.

“A motif very simply is an intelligently weighted portfolio of stocks built around these real-world ideas. Things like healthy foods — does that make a good investment? Do women make better CEOs than men? We have motifs for that and what we allow you to do is with one click buy 30 stocks that are intelligently weighted to act on that idea for the price of a single stock transaction. [It costs] $9.95 to buy 30 stocks in real time.”

The company picks the stocks, and the client can agree or disagree and swap stocks in and out as he or she sees fit.

For instance, pick an idea like pets. If an investor feels that despite the economic slowdown, households will still spend money on their pets, maybe even more by splurging a little, the investor can open a motif account with the idea of investing in pets and let the company go fetch the stocks in businesses that cater to pet owners.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

“I am crazy about my pet and I know that for me, whether we head into a double dip or if we head into another boom, I am going to take care of my golden retriever, and I think that most Americans are the same,” said Walia.

In reality, such a pet motif exists, and it has done very well.

“It’s done about 40 percentage points and it is beating the S&P by about 15 percentage points.”

The pet motif includes approximately 20 stocks ranging from veterinary care companies to makers of dog food to pet stores.

Investors can also enjoy transparency not seen elsewhere.

Safe and steady mutual funds, for example, don’t have to expose what stocks they are picking until afterward, in quarterly disclosure reports.

If an investor were worried about Facebook, which tanked after its initial public offering, or worried about owning companies for moral reasons, such as tobacco companies, a mutual fund could own such assets without the investor knowing.

But with Motif Investing, “what you see is what you own,” Walia said.

Plus, Motif Investing is cheaper, too, by forgoing management and other fees.

“In a world where if you are paying 2 to 3 percent for [exchange-traded funds] and mutual funds and Wall Street is telling that consensus estimates over the next five years will be a 3 to 5 percent return, your expected return is not a guarantee,” Walia said.

“Your fees are definitely a guarantee,” he added.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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