My investment philosophy deviates significantly from most other traditional financial advisors. Before working with me it is important that you understand the differences in my approach. 

Usually, the mass media, public at large and too many financial advisers are most interested in "hot" or "in the news" ideas which leads them to be emotional and unfocused. I seek a less emotional and more analytic approach to investing. Very often I will want to buy what others are selling, and sell what others are buying. This approach allows us to ebb and flow into "buy low" and "sell high" opportunities. 

To achieve my goals, I have incorporated a large amount of technology into my investment process. I also lean heavily on a network of brilliant financial minds from around the world that I was lucky enough to meet over they years due to my media exposure.

A 4 Step Investment Approach

I use a structured 4-step method for building smart asset allocations and selecting the investments for your asset allocation. This method, largely borrowed from great investors, includes these four steps to finding investments:

  1. Secular Trends: Understand the big long-term trends within the global economy.
  2. Government & Central Bank Policy: Analyze how governments and central banks can impact outcomes and timeframes through policy.
  3. Fundamental Analysis: Bottom up analysis of industries and companies to help understand approximate fair value and financial outlooks.
  4. Technical & Quant Analysis: The markets give us clues through the pricing of assets about industry and corporate strength, as well as, investor sentiment.

Using this step by step approach eliminates most of the guesswork. What we are left with is a more structured Bayesian mathematical approach. When the math gets too hard, we take Charlie Munger's advice:

“We just throw some decisions into the 'too hard' file and go onto others.”  

(Charlie Munger is Warren Buffett's partner at Berkshire Hathaway)

In other words, I don't try to be a hero. If I can't figure something out, I move on. There's always another opportunity.

Build A Margin Of Safety

Building a "margin of safety" is a the core element underlying all investing. It simply is not true that more risk leads to more returns.

The reality is that keeping risk as low as possible within a strategy is what leads to better returns. So, when I invest in stocks, which are inherently risky, I look for ways to invest that will reduce that risk.

Of course never losing money is impossible. But, as Packer legend Vince Lombardi said: 

“Gentlemen, we will chase perfection, and we will chase it relentlessly, knowing all the while we can never attain it. But along the way, we shall catch excellence.”

That is my goal with investing, the pursuit of perfection to be excellent. Being excellent starts with building a margin of safety in order to manage risk.

In Search Of Alpha

Alpha is the excess return on investment relative to benchmark of similar risk. For most equity investors, the frame of reference is the S&P 500 stock market index. If you are an equity investor, that is the risk that you must be willing to assume.

My goal for you will depend on the type of investor you are.

  • If you are a defensive investor, then we will seek to have less risk than the stock market, but try to get as close as possible to a stock market return for your risk tolerance.
  • If you are an offensive minded investor, then we will seek to have about the same risk as the stock market, but make more total return.

There are no guarantees that we will achieve our goals, but we will have a plan and that's better than not having a plan.

Investing Vs Trading

There are two sorts of asset allocation:

  • Strategic which is your long-term targets, i.e. 60% stocks, 20% alternatives, 20% bonds.
  • Tactical which is what you do in response to market conditions in real time.

When volatility is low for an extended period of time and markets become overvalued, that is generally a good time to become tactical. During these times you will move away from your strategic asset allocation to become more defensive.

When volatility spikes higher and asset prices fall, that is generally a good time to become tactical. During these times you will move back towards your strategic asset allocation and even become more offensive, or aggressive, in your asset allocation for a time.

When the stock market is "in the middle" and we are seeing slow steady growth without a mania, then we will do almost nothing and hug your strategic asset allocation, often for years.

Value & Growth

Perhaps most important to think about is the relationship between value and growth investing. There is an idea that this is a one or the other proposition. You might have heard people say, "I'm a growth investor" or "I'm a value investor." Both ideas are wrong because they are too simplistic.

I have seen three methods of investing work in my 25+ years.

  • Invest in growing companies when they are overlooked or unloved by the stock market. That is, have both an element of growth and value. This doesn't happen often, but when it does, there are great ideas. It takes getting to truly know the companies to have the gumption and patience to do this sort of investing, which is often in smaller and midsize companies. Peter Lynch often worked this way.
  • Invest in dividend paying companies with solid balance sheets and businesses on the right side of long-term secular trends. [Many dividend investors end up buying stocks in companies are high debt and have no growth, that makes them very susceptible to a changing future and shocks like a banking crisis or Covid. Beware being a yield chaser.] Again, we see both elements of growth and value, but with an income kicker. Warren Buffet owns many large cap dividend paying companies, though according to him, the dividends are coincident rather than a focus. Think that through.
  • Find companies that own valuable hard to replace assets that are undervalued by the current market. This is similar to Benjamin Graham's valuation approach also taught to Warren Buffett. These companies are generally available to be bought at bargain prices during industry troughs, i.e. when there is blood in the streets.

If these thoughts resonate with you, I would love to talk to you about investing.  Contact me here to set up a time to discuss an investment path for you.