Researching individual stocks can be time-consuming. Most retail investors don’t have the time or knowledge required to properly vet companies. If your goal is to beat the market, 7investing offers 7 monthly stock recommendations for $17 a month or $170 a year. The service started back in March 2020 and as of December 22nd, their stock picks are already outperforming the S&P by 43.95% (61.57% vs. 17.62% for the S&P 500). This 7investing review will look at the pros and cons of this investment newsletter as well as its historical performance. We also include an interview with the founder of 7investing, Simon Erickson, to help you understand their philosophy of investing.
The opinions in this review of 7investing are our own and we do not let advertisers influence our content. This content has not been provided by or endorsed by any advertiser. To support our work, some of the links in this article might be from our sponsors.
- Affordable investment newsletter that offers 7 monthly stock picks with detailed reports for each company.
- Stocks are selected from various industries, market caps, and risk levels.
- Members get regular updates on recommended stocks in the form of articles, videos, and podcasts.
- Transparent tracking of stock performance over time with a side-by-side comparison to the S&P 500 benchmark.
Table to contents
- What is 7investing?
- What is included in the monthly investment reports?
- How much does 7investing cost?
- Is 7investing worth the cost?
- Who should subscribe to 7investing?
- Pros and cons of 7investing
- Historical performance
- Seven principles of 7investing
- Interview with 7investing founder and CEO: Simon Erickson
What is 7investing?
7investing was started by Simon Erickson in March of 2020 -in the middle of the pandemic- with a mission to “empower you to invest in your future“. The company’s lead advisors have expertise ranging from Biotechnology to retail and technology. The seven lead advisors have collectively written over 10,000 investing-related articles. Together they seek to identify developing trends before they become widely known, as well as companies that drive disruptive innovation.
On the first day of every month, each lead advisor publishes an in-depth report on the company he or she believes is best positioned to outperform over the long run. Each report contains a “Style Box” that categorizes each company into an industry, investment style (such as growth, income, international, etc.), and a risk rating ranging from “low risk” to “very high risk”. This gives members a quick high-level overview of each company and allows them to focus on companies that match their goals and risk tolerance. Members can also filter the stock recommendations to find other companies that match their interests, investment goals, or risk profile:
What is included in the monthly investment reports?
Each report (i.e. stock recommendation) takes about 7 to 10 minutes to read and there are seven reports each month. Here are just a few of the sections found in each report:
- The 7investing Key Takeaway: A summary of the advisor’s investment thesis for the stock. In other words, the reason the advisor believes this stock is the best investment at this time.
- What Does the Company Do?: Provides a description of the products and services offered by the company along with examples to make the business understandable to members. Some of the industries covered by 7investing can be difficult to understand (for example, biotech) if you don’t work in, or closely follow, them. This is a very helpful section.
- Thoughts on Valuation: This section doesn’t talk about price targets. Rather, it focuses on the best way to evaluate each stock pick based on the industry and the growth stage the company is currently in. It will sometimes compare the company’s valuation with its competitors.
- Key Risks: A list of the most important known risks that could lead to the loss of invested principal.
- What Should We Be Watching?: Key metrics and developments that shareholders need to watch over time. This information can help you tune out the noise when the market gets volatile and focus on how the company is doing.
One of the best features of 7investing is their “Deep Dive” videos which give members a behind-the-scenes look into their stock selection process. After researching a stock, each lead advisor pitches a stock idea to the other advisors who can then ask questions about, or even challenge, the investment thesis behind each recommendation.
Below is a screenshot of the stock recommendations page as seen by members (stock names and ticker symbols have blanked out). The three columns on the right show you the stock’s performance, the S&P 500 performance, and the difference between the two. As you can see, the majority of stock picks are outperforming the market:
How much does 7investing cost?
7investing costs $17 a month or $170 a year (a 16% discount) and that gives members access to all their content. Some investment newsletter services start with a “basic” paid membership but then try to upsell members with more expensive newsletters. This is typically done through weekly or even daily emails promoting “premium” newsletters that often run in the thousands of dollars per year.
7investing chose not to do that, as their goal is to make investing accessible to the average person. For less than a dollar per day, members get full access to all recommendations, articles, interviews, and podcasts.
If you are interested in signing up for 7investing, you can use promo code “inveduco” to get $10 off for the first month ($7 instead of $17) or $10 off for an annual subscription ($160 instead of $170). Note that the discount only applies to the first month (or year) of your membership.
Is 7investing worth the cost?
To put the cost of the subscription into perspective, $17 a month adds up to $204 per year. If your goal is to keep fees at no more than 2% of your investments, you would need to invest a minimum of $10,200 per year1. This can be a significant amount for someone just getting started.
There’s another way to look at pricing. If you had invested as little as $20 into each of the seven stock picks ($140 a month) from March through December 2020, you would have invested a total of $1,400. Your portfolio would now be worth approximately $2,230, compared to only $1,645 if you had invested the same amount into an S&P 500 index. This would more than cover the cost of the newsletter. And yes, you would still be beating the market by a significant margin.
So you don’t necessarily need a large amount of money to take advantage of 7investing’s recommendations. No matter how large or small your investment budget is, it might be best to invest through a brokerage that allows fractional shares (such as M1Finance). That way you can invest equal amounts into each stock and don’t need to worry about the price of any given stock.
Who Should Subscribe to 7investing?
7investing is ideal for people interested in taking a more active role in their investments. Index funds are a wonderful option but they will typically only match market returns. Depending on your stock-to-bond ratio, you can typically expect to earn an average of 5% to 10% per year over time.
Individual stocks offer the possibility of earning significantly more but they also come with greater risk. This risk can be somewhat reduced by investing in a sufficiently large number of companies, as well as diversifying between industries and investment styles.
If you are comfortable with taking on additional risk and have a long-term investment horizon, 7investing could be a great resource to help you potentially achieve greater returns or reach your goals sooner.
Note that 7investing is not for day traders. The act of buying and selling stocks within a short period of time is fundamentally incompatible with 7investing’s philosophy. Their reports do not contain “price targets” or other information typically used by day traders.
Pros and Cons of 7investing
We are big fans of 7investing. Of all the investment newsletters out there, we believe this is one of the best options available on the market today. The fact that 7investing is so affordable makes us even more enthusiastic about recommending this service. Investing in individual stocks isn’t right for everyone. But if you’re the type of person who isn’t satisfied with getting “average” returns or if you prefer a more hands-on approach to investing, 7investing should be at the top of your list of investment newsletters to sign up for.
- Affordable, detailed monthly stock reports.
- Impressive track record of market out-performance.
- Stock picks are transparently tracked on the website and benchmarked against the S&P 500.
- Provides stock recommendations for all levels of investors ranging from beginner to advanced.
- No upselling of ad-on services to members. $17 a month gives you full access to all 7investing services.
- Members enjoy a large amount of content (company updates, interviews, and videos) throughout the month in addition to the stock recommendations.
- Members can easily sort recommendations by risk level, industry, or investment style.
- Having started in early 2020, 7investing doesn’t have a very long track record yet.
- No stock recommendation is guaranteed. Investing is risky and picking individual stocks can potentially increase your risk, especially without proper diversification.
- Market cap isn’t specified for the stock picks and there is no easy way to sort companies by market cap.
- A relatively low number of international companies have been recommended so far.
As of 12/21/2020, out of the 70 stocks recommended since March 2020:
- 61 stocks (or 87%) are currently showing a positive return.
- The average stock pick is up 61.57%.
- 47 stocks (67%) are outperforming the S&P 500.
- 13 stocks (18%) are currently showing a return of over 100%.
- The highest single-stock return is 399%.
- The biggest single-stock drop is 29%.
Seven Principles of 7investing
When it comes to investment styles, 7investing cannot be easily classified along with the typical categories of “growth” or “value”. This is by design, as 7investing lead advisors are constantly searching for the market’s best investment opportunities within a wide range of industries, investment styles, and risk profiles. No matter what your preferred investing style is, 7investing advocates the following seven principles:
- It’s personal. 7investing can guide you but only you know your goals and risk tolerance. Make sure you do what’s best for you and your personal situation. After all, it’s your money and no one cares about it as much as you do.
- Buy companies, not tickers. You’re buying a real business for the long haul. Does their leadership have a good track record and do they have a compelling long-term vision for their business?
- Don’t stress yourself out. The stock market can be scary in the short term, but investing is a long-term process. Only invest money you won’t need for a minimum of three years and avoid borrowing money to invest in stocks (i.e. investing on margin).
- Time is on your side. Many investors are obsessed with short-term results. But businesses take years or even decades to grow. Investing in stocks can make you rich if you have the patience to let your investment theses unfold.
- Valuation matters. Many high growth businesses appear expensive when using traditional valuation metrics (such as price-to-earnings), especially when investors anticipate a high amount of future earnings growth. This anticipation often gets priced into the stock. You can still invest in these richly valued stocks as long as their valuation allows for enough future growth. When too much future success is baked into the stock price, the investment is unlikely to outperform in the long-run.
- Find one-of-a-kind companies. Invest in companies with strong and sustainable “moats”, i.e. competitive advantages that shield them from competitors and allow them to raise their prices and profits.
- Develop a thesis. Keep an investment journal and write down your reason for buying a stock. Be specific. If and when the stock price starts falling, your thesis will help you evaluate whether to sell, hold, or buy more of the stock in question.
Interview with Simon Erickson, founder and CEO of 7investing
Inveduco: Can you tell me a little bit about your background and how you got started in investing?
Simon Erickson: Sure, the story I like to tell is that my paycheck always depended on predicting the future. I started as a technical sales rep in my 20s. And so was out there kind of selling to some innovative companies that were using specialty chemicals. So it was hydraulic fracturing. It was organic agriculture, things like this. But it was always what was the next thing going to be what was going to be the higher margin product that they wanted to sell. After that, went back, got an MBA in entrepreneurship, from Rice University here in Houston, and worked for a large oil company, developing their renewable energy portfolio, and building a business plan that we put up in front of corporate and had a lot of success with solar projects for that, and joined the Motley Fool for seven years after that, ran a service called Motley Fool Explorer that again, every month was kind of looking at innovative trends taking place in the stock market. But this time rather than doing it from a specific company’s perspective, a corporate perspective, it was the outside looking in, it was individual investors sizing up those companies that were capitalizing on those innovative trends. And then here we are today, I founded 7investing, have a fantastic team of other advisors that are picking stocks every single month. We give each of our advisors the same single question, which is “what is your very best idea in the stock market?”. We compile all seven of those together into a subscription product that we charge $17 a month for, we have team calls, where we discuss the picks as a team, so you get to see our actual research project. And then as you know, we have subscriber calls, where we discuss all of the pics that we’ve made with our subscribers, everyone, so we’re having a lot of fun. We’re enjoying it, we were looking to empower individual investors.
Inveduco: It seems like a lot of investment professionals and investment books claim that it’s almost impossible to beat the market. They will often point out the fact that the vast majority of mutual funds under-perform the market as proof. What do you think is the secret to beating the market?
Simon Erickson: The question is related to the efficiencies of the market and reversion to the mean, which is something that Michael Mauboussin has always preached in his books. It’s very hard in large funds that own a huge number of stocks that are very large to outperform the broader market over time because the market itself is the S&P, which is the 500 largest market cap companies in the United States. And so typically, when you’re a really large company, you’re competing against every other large companies, your return on invested capital tends to regress to the mean, others will copy you, competition pulls away at excess profits that those large companies have. But I think that the misunderstood and more inefficient part of the market is at the cutting edge of technology. And so for me, it’s always been about “what is new out there?”. And why can large companies not adapt to these innovative changes taking place? Because it would disrupt their own business? If they were to try to move this giant ship in a new direction, what profits are they taking away from their existing golden goose that would really hinder them to do that? And so this is things that you’ve seen through e-commerce, through cloud computing, through a lot of biotechnology versus you know, traditional pharmaceutical companies. I mean, there are pockets of innovation that actually favor the smaller companies. And it’s something that Clayton Christensen wrote about, a Harvard Business Professor I have a ton of respect for. I was a student of his work, a lot of what he was writing about still is embedded in my investing process. And a lot of the 7investing recommendations that we have, you know, we aren’t really going out and recommending the Walmarts of the world or the companies that are super well established in their industries. We’re looking for the innovators because we think that that is the inefficiency of the stock market that individual investors like us -we don’t have the same rules as a mutual fund that’s running $20 billion of assets- really can capitalize on.
Inveduco: What makes 7investing different from other investment newsletters?
Simon Erickson: I think that we’re very accessible as a team. I think that the biggest thing, that you can reach out directly to everybody on this team and ask questions. And we aren’t just -I don’t want to speak too much about my competitors- but I think that’s something that we we do that’s very different is we aren’t just broadcasting things out into the ether and saying, “Hey, here’s our publications, take it or leave it”. We want people to engage with us. We have a live stream show where you can ask us questions live on the spot about any of the topics we’re talking about. We have a subscriber call where you can put us on the spot and ask us about any one of the recommendations that we have. We show you directly behind the scenes our research process of where our team itself is picking apart the companies that we’re recommending This is not meant to be just a traditional publication product where it’s, you know, we throw it out there and then we disappear. At the very foundation of what 7investing is, our mission is to empower you to invest in your future. What does that mean? What you’ve got to understand what’s going on, because you’re the one that’s actually buying and selling stocks based on what’s best for you. And so we’re not just trying to sell you a subscription and then upsell you to more expensive subscriptions like traditional conversion marketing is doing. Our goal is really to be more interactive and help people understand this crazy thing out there called the stock market.
Inveduco: Where do you look for stock ideas? And when you find a stock you’re interested in, how do you go about analyzing it? Do you prioritize valuation?
Simon Erickson: There’s different approaches to this, you know, we have several different advisors on the team that each have a different research process. Mine personally is typically top-down, I tend to start at markets and say, “Okay, why is this market changing, and who is going to capitalize on those changes?” And again, that just kind of has been my research process for I guess, about four or five years now. Every single month, I used to go to a technical conference at MIT EmTech, South by Southwest, Collision Conference, whatever it might be, biotech conferences, I see really smart people up on stage talking about this is what needs to change. This is the pain point of our industry. And so you then you go back, you say, okay, this makes sense. Let’s connect the dots. Let’s figure out where the problems are. You look at the companies that are solving those, a lot of them are private, but a lot of them are publicly held. And then from that, I tend to dig even deeper into the management team, and what is their experience? Do they have a past history of success? Do we think that they’re going to be the ones that are going to cure this problem? And again, this is, a lot of the times these companies are maybe a billion-dollar market cap, maybe $3 billion market cap, some of them only got a couple million dollars of revenue, you know, that is incredibly inefficient, because large funds aren’t buying those types of companies yet. But as they continue to make progress, disrupt those industries, solve the problems that the large incumbent players are not, that’s when you can get incredible gains as an individual investor.
Inveduco: For somebody who’s interested in signing up for 7investing -and let’s say they’re a new investor- how do you recommend to get started? How many stocks should they buy? How many stocks is too many? How many stocks is not enough?
Simon Erickson: My biggest recommendation is to kind of take this at your own pace and feel like you don’t have to jump in the deep end immediately. You know, we recommend seven companies every single month. So that’s a lot. You know, most people aren’t buying seven companies every month. But we also have filters of what type of industry is this recommendation? And what type of risk level is this industry in? Who is the advisor that recommended this? And what kind of companies do they tend to look for? You know, we try to guide people. You might be saying, “Hey, I really want to find a dividend-paying stock right now for my Roth IRA. That’s what I want to go out and invest in this month, I think that this is something where I want to put my money to work.” That might be a good opportunity to find a lower risk, dividend-paying, large competitive advantages kind of company. Versus if in two or three months, you come back and you say, you know, I’m really ready to start swinging for the fences. Let me go after a high-risk biotechnology company. I mean, we try to guide people based on individual perspectives, because we think that investing really is a personal thing. There’s no one size fits all, we don’t want to just say, Hey, we’re just going to limit ourselves to these types of companies with these types of risk levels. It should be a full buffet of options. And so if you look at our advisors, we’re, we’re hitting retail, we’re hitting biotech, we’re hitting digital payments, we’re hitting cloud computing, but we’ve also got utility stocks that we’re recommending. And I think that each one of those types necessitates different research and different qualities that still show they’re going to outperform the market. And right now across the entire continuum, our recommendations page, 7investing.com/recommendations, transparently displays every single recommendation we’ve had, we’re not just cherry-picking the winners and excluding the losers. We’re throwing all of them out there. And the average return across the board right now is 51%, which is outperforming the broader S&P 500 by 30 percentage points. And so I think there’s a lot of credibility and validation in our process. But also it is a personal thing. I don’t want to say that people should do this or people should look at these types of companies. Our goal has always been to kind of guide people based on our recommendations on what might be best for them.
Inveduco: How long is each stock recommendation “good for”? For example, do you still consider your older stock recommendations to be worth putting new money into?
Simon Erickson: This is something else that we’re very different than much of the rest of the industry because we’ve gotten so used to seeing 12-month price targets or fund managers getting in and out with high turnover of positions, you know, where they’re buying and selling stocks, and they’re only staying in the portfolio for a couple of months. We’re doing it very differently, we’re buying and holding indefinitely, you know, we have no intention of any of our recommendations, actually selling it at all. We’ve done a lot of quantitative research on this, that shows that it doesn’t really pay off, when you’re looking at kind of sectors of the market that we tend to look at. It doesn’t pay to try to outsmart ourselves and say, Oh, we think it’s overvalued right now. So we’re gonna sell or Oh, you know, we don’t like what’s going on in the market, we’re gonna sell. I think that a lot of times that that kind of hinders your returns, because then you miss out on Tesla going parabolic, or, you know, the companies that you think are in trouble, and they’re really not, and you sell out and you trick yourselves. So every position on our scorecard, we’re gonna hold indefinitely. There is a caveat to that, that if we do really see something very, very bad, you know, CEO steps down, or there’s some fraud or something really terrible. We’ll send an email notification to subscribers saying, Hey, we probably recommend that you sell or at least don’t buy into this company right now. But we’re gonna keep it on the scorecard. We’re gonna let everything ride so that that return that you see is completely transparent, and it catches every single one of our recommendations.
Inveduco: Thank you very much, Simon. I really appreciate you taking the time to answer our questions.
1 This assumes that you pay the full monthly price of $17/month.
2 As of 12/22/2020