Investing

Investing, today, can mean wonderful opportunities and terrific risks. The investor’s dual goals of building wealth and protecting wealth require a sound method. The method must include consistency, objectivity, adaptability, reliability and humility. Anything less we find unacceptable.

Our Method

Today, it’s possible to study and follow, in depth, more investment opportunities than at any time in history.

Through instant access to exceptional independent research by professional analysts, and to virtually unlimited digital financial databases, it is possible to analyze, screen, and compare on a relative basis, thousands of companies. We proactively monitor and edit a very large universe of equities that do not interest us at the time, and a much smaller list of companies that we do find worth owning. The companies that interest us are monitored daily for short-term conditions that might possibly present an unusually attractive entry price. The only companies considered, are those with what we deem outstanding long term growth prospects. There are just too many choices, and not enough time to ponder investing in a company that does not have exceptional qualities and promise. Companies that are not thought to be worthy investment choices, currently, must be monitored as well. Because, from that group will come future investment candidates. Stocks owned or considered prospects are reanalyzed constantly, relative to market price, for any reconsideration as a buy or hold. Positions whose quality and prospects continue or improve are allowed to grow in relation to the client portfolio. A buy or sell decision does not necessarily mean action is taken immediately. Typically buy or sell candidates are tracked for exceptional price opportunities, particularly in these modern markets of short-term turbulence. While not a huge contributor to overall performance, timing of buys and sells can, over time, add incrementally, and is, we find, worth the extra effort.

Portfolio Management

We feel strongly that every single portfolio should be viewed separately.

We take issue with managers whose client portfolios are identical. They are like mutual funds disguised as managed accounts. Instead, we see each client differently. Their time of life, when funds are added to the portfolio or withdrawn, and risk profile are only some of the factors that make them unique. Client assets must be treated according to their circumstances, not according to the profile of the portfolio manager’s holdings. As price movements present a desirable entry point, a position will be taken in a portfolio. That position will be held until something changes in the life of the company, or the holding no longer justifies the market price. Other than waiting for desirable entry and exit points on particular issues, we do not attempt to engage in market timing. A typical portfolio will be diversified as to holdings, and generally fully invested.

Your Portfolio Manager

A Few Key Questions for Selecting Your Investment Firm . . .

Are they Experienced? Do they have years of true investment experience? Time spent selling investment products, financial planning, these don’t count. How many years really investing?

Are they successful investors? Do you believe they have been successful investors over time? Not just appearances, or talking the talk.

Do they eat their own cooking? In other words, do they invest along with you in the same stuff they are recommending? If they’re good enough for their clients, if they feel strongly about them, it only follows that they should be investing in the same stocks. Get a clear answer on this. If the answer is not yes, it’s a red light.

What are their hours? Financial markets start early. In California foreign currencies, bonds and stocks are all open by 6:30 am. The true pros are in before that, scanning financial news, checking on overnight foreign markets, getting a feel for the field before the action starts. If your people are getting in after the markets are already open, it might be an indicator.

What do they do? Sound simple? Maybe the most important test. Are they really salesmen with a different title? Are they managing your money all day, or are they plopping it into something, taking their fee, and then prospecting for more clients? How do they spend their day?

How did you meet? Did you find this person? Or did he find you through a solicitation- cold call, advertising, seminar or other sales device? If so, maybe this is how he spends his time. In that case, you might want to move on and let him continue his quest. In any field, the successful professional has not the time, nor the need to solicit new clients. People come to him.

Did you shake hands? Most investors have not met and are not allowed to communicate directly with their portfolio manager. Salesmen for large investment firms place most managed accounts with a third party. This person does not know the client; the client is just a number to them. If the client were allowed to talk with these portfolio managers, he would find many of them do not pass this checklist.