The Art of Investing
How do investors earn above average returns without taking undue risk? By buying undervalued securities. Markets are said to be efficient, but research shows that undervalued securities may be able to offer more return at lower risk.
When bad news strikes, investors often sell emotionally, without evaluating the long-term effects of the news. Thus, opportunities are created for value investors.
Typically, negative news will affect a whole industry. The 2008-2009 housing bust decimated tool makers, such as Black & Decker, Snap-On, and Stanley Works. These companies remained profitable throughout the recession and in fact used the time to become more efficient operationally. Yet the stocks were selling at prices that implied we’d never build another house in the United States. Because their prices were already so low, the risk of investing in this industry was low as well. When the first signs of recovery appeared on the horizon, the entire industry rallied strongly.
Value can be found in all markets, from international securities to bonds and options. We apply our value philosophy to every aspect of portfolio management, seeking securities at reasonable prices in all venues.
How We Make a Portfolio
Your first visit with us is your chance to be heard. We define a good meeting as one where you do most of the talking, letting us know what’s important to you. Take a look at Case Studies to see how we solved certain client conundrums.
We build portfolios security by security with you in mind. If volatility worries you, we won’t include our riskiest holdings in your portfolio. If you need cash flow, we will tilt to high income.
We rarely use mutual funds or ETF’s, though we are skilled at evaluating them if you bring them in. Mutual funds don’t know you; taxes can be a negative surprise. Their fees are very high while offering zero service; and many perform poorly. We don’t think you should put up with that.
You can read in detail about the history of our firm and our philosophy by downloading The Art of Investing.