My Investing Philosophy

The following is my investing philosophy and beliefs.

Absolute Returns

Today’s investing world is plagued by short-term players. Most professionals are set up to play “heads I win, tails I win even more” with their base fees and performance fees. I have the opportunity to not play that game (yes, opportunity). I manage my own money (not a lot), which means the goal is absolute returns, not the generation of fees or Assets Under Management. This also means that I only care about a benchmark as a reference, not as a success marker.

All following tenets of my investing philosophy support Absolute Returns.

Risk Control

I am concerned with risk, especially in todays market where greed and hope are everywhere. When looking at any investment, my first thought is “What is the downside risk?” Business fundamentals, business quality, and leadership quality all contribute to Risk Control. Long term performance rests on these things.

Consistency

Consistency in the investing process leads to superior outcomes. While I am not dogmatic on the process, I am firm in my stance in committing to the process. Tweaks to the process are normal. Abandoning the process is not.

Market Inefficiency

Mr. Market provides opportunities because Mr. Market is made up of millions of humans. We humans are not efficient by nature. This sounds like a bad thing but it’s really a good thing for those that practice a little bit of discipline. Market Inefficiencies are fair sport for the disciplined.

Infinite Time Horizon

My aim is not to retire, buy a big house, or be the richest person. My aim is to have just enough resources so my kids have to do something, but they can choose anything. They can’t just do nothing! Everything over that amount is going to charity. I am in my mid 30’s so I figure I have about 30 to 40 years to do this.

Micro-Only

Macro forecasts, market timing, and hedge fund techniques are shunned. I invest from the bottom up, focused on the micro of individual businesses.

All In

100 percent of my net worth is invested except for a rainy day savings fund. I may hold a small percentage of cash from time to time, but the aim is to be 100 percent in public equities as cash does not grow. Businesses grow.

Note: I have a relatively very small starting amount, so when I start to make regular contributions from earnings it will look substantial. It is not.