At today's prices, despite zero profits in sight, it could be time to consider XERO FPO NZ (ASX: XRO) shares and Freelancer Ltd (ASX: FLN) shares.
The obvious but secret investing strategy
You may not realise it at first but there is one super-attractive trait you and I have that gives us a great advantage over the pros, like fund managers and paid stock pickers. This trait is so obvious that it's often forgotten.
It is, time.
As individual investors, we have time on our side. While professional money managers have to confront their investors each month with a set of results and performance — including excuses — you and I can afford to think in handfuls of years. Decades even.
Using some simple stock-picking rules and thinking 10 years ahead will give you the best chance of making great returns, in my opinion.
Sure, it's no secret. But it may as well be — because few people actually think long-term.
2 stock ideas for 2017
Let me give you a prime example. 15 years ago almost everyone thought the CEO of Amazon Inc was crazy because his company didn't make a profit. Instead, Jeff Bezos focused on providing a great service for users and invested in his business — although, he still generated positive cash flow. He thinks and invests in decades. Amazon is up 5,400% in 15 years and is one of the biggest companies on earth.
I'm not saying Xero and Freelancer are the next Amazon — far from it. However, they have unique features which may enable them to carve out a bright long-term future for shareholders, even though they are not making a profit. This type of growth takes time. Lots of it.
Freelancer has created a global marketplace for 'employers' to connect with 'freelancers' around the globe. Mostly, its first-world employers hiring freelancers from developing nations to do things like software development, design, engineering, marketing, accounting, legal and more. It's not the only company in the space, but it has a very big user base.
Xero is the accounting software provider. Its cloud-based accounting tools are accessible anywhere with an internet connection. The company runs at a loss but I suspect it could quite easily turn that around — if it wasn't so focused on making Xero the best accounting software in the world.
Foolish Takeaway
It's really easy to get caught up in the near-term and forget the best investing returns require time — and lots of it. Endowment funds, which have been used to fund universities for decades, have made use of an investment portfolio with ultra-long-term time horizons to fund their operations.
Freelancer and Xero have been investing in their platforms for years, potentially forging their long-term success. They are two share ideas for 2017 and beyond.
