There are many methodologies to make money in the financial markets, including Value Investing, Market Timing, Fundamental Investing, Momentum Investing, Asset Allocation and Technical Investing. Each has its own methods and “rules” for selecting specific investments and managing investment portfolios. All of these styles have been shown to work as long as they are followed with discipline and consistency. Our style is called long-term investing.
As long-term investors we have a bias toward companies whose long term prospects look favorable. We favor companies whose products are generally superior, whose financial resources are sufficient to fund research, marketing and innovation. We choose companies who clearly articulate their strategy, and who have a very large market for their products. We want companies that show good profit margins on their products, are “admired” by their competitors, and have decisive, innovative management.
Over time we have refined our style to incorporate certain aspects of other styles. We do charting (technical analysis) to identify entry and exit points for stocks we would like to won or sell, we utilize valuation models (value style investing) to identify pricing inefficiencies (underpriced and overpriced stocks) in the market, and we look closely at the financial aspects of companies we are considering buying for our clients (fundamental analysis).
In essence, we find companies with a clearly articulated strategy, and then we monitor the progress of these companies to see how it is working. If we determine, based on news sources, analysts reports, etc., that their strategy is not working, we sell the stock.
In order to make our style work for you, we add specific issues and objectives to the mix through the use of portfolio models. Each account is assigned a model, which helps to define the risk and return characteristics which are suitable to each client – aggressive growth, capital appreciation, conservative growth, income, etc. We use different proportions of different types of securities to blend our style with clients objectives in a specific way. Our models keep us from drifting too far in any direction – either too aggressive or too conservative.
In summary, long term investing refers to the discipline we use to select, monitor, and determine when to sell securities. Our model portfolios then help us make sure that we are accepting only the level of risk we need to, in order to generate a good return and meet your goals.
Long term investing requires more patience and discipline than many other forms of investing. There may not be the excitement and immediacy of the rewards provided by more aggressive styles. However, we use this method, because it allows us to succeed in meeting your objectives in many, changing environments. Remember the fable of the hare and the tortoise? In it Aesop was trying to point out that those who see life as a sprint come in second to the more sure and steady performer. Our style works best for our clients. We know how to do it and it has worked well. Our data shows clearly that the longer a client is with us, the better their investment results. To us, long-term investment success is more likely to go to the sure-footed marathoner than to the exciting sprinter. And we want all of you to be winners in your investments.