Three tactics. One investment approach.
My approach combines capital preservation, investing when market negativity is high, and a concentrated portfolio of my best ideas.
Work to preserve capital.
I consider the possibility of a significant decline before committing capital. When several indicators suggest that markets are dangerous, I look for ideas that are less closely correlated with the overall market.
The decision is about how much to commit as well as what to buy. When conditions appear unfavorable, waiting can be an investment decision in its own right. That patience also has a cost: a portfolio may miss gains while the market continues to rise.
Invest when market negativity is high.
When the sentiment of investors gets very negative, it is time for action. I return to the ideas I have researched, sometimes for many years, and narrow them to the opportunities I find most compelling.
A lower price alone does not make an investment attractive. I weigh the reasons to invest alongside the possibility of further losses.
Concentrate on my best ideas.
I narrow my research to a few of the best ideas I can find. Today, that primarily means investment managers whose approach aligns with mine, rather than individual securities. The emphasis is on thoughtful selection and holding quality investments.
A focused portfolio gives each investment a meaningful role. It also means that a disappointing result in one holding can have a greater effect on the whole portfolio. That tradeoff is part of the discussion before we work together.
How the tactics become a portfolio.
See the steps I follow, from researching opportunities to selecting a few investments.
See how I investUnderstanding the approach.
What does a concentrated portfolio mean?
It means holding a relatively small selection of investments rather than trying to own the whole market. Each holding has more influence on the outcome, including the possibility of loss. There is no fixed number of holdings promised here.
How is this different from following an index?
An index-based strategy seeks exposure to a defined group of securities. I use judgment about market conditions and selected investment managers to build a focused portfolio. I am not trying to beat the market, particularly when it is rising significantly, and results can differ substantially from an index.
Let’s talk.
Tell me what you want from your investments, and we can discuss whether my approach may help.
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