Investment Philosophy
These are the guiding principles that influence investment philosophy:
- It is as valuable to not lose money when markets crash as it is to generate gains when markets rise.
- Superior risk-adjusted returns will be sought regardless of location i.e., Brazil, China, Australia, Canada, Norway, South Africa, USA etc.
- Economic conditions are subject to change with greater velocity and amplitude than we became accustom to during the 1982 – 2000 bull market. Therefore portfolios need to be liquid and able to be hedged inexpensively.
- We do not subscribe to a buy & hold philosophy. To do so necessarily exposes clients to significant drops in their life savings. (Look what happened to your accounts in 2000-2003, 2007-2009, and is about to again 2011-2013.)
- Clients should know the rationale for every investment position in their portfolio (if they want to know).
- The total cost in investing should be kept to a minimum and should be known by clients.
- Decisions to buy or sell are primarily based on Fundamental Analysis. This involves an understanding of metrics such as price to book value, price to sales, price to cash flow, price to earnings (both as-reported as well as operating), plus a number of broad economic variables. Technical data is also considered. The greedometer is instrumental in providing insight into the long term trend of the stock market.
NAPFA