Our Investment Philosophy
Navigating a rocky investment environment calls for an experienced skipper, one with a firm and steady hand at the helm. When you engage our services you hire such a skipper; our task is to guide your ship safely to its destination by protecting your capital, obtaining an adequate return on your investment, understanding the risks involved and managing them, and preparing for the unexpected.
Our rigorous and disciplined investment selection process enables us to ferret out a manageable universe of stocks, bonds, commodities, and ETFs, all of which we thoroughly research and analyze, and from which we judiciously select fully optionable investments that may either generate adequate current income or offer you an opportunity to prudently grow your capital while keeping you reasonably whole.
We DON'T time the market; we DON'T chase any fads; we DON'T engage in speculative trades. We seek solid long-term investments that will achieve your desired goals at the lowest possible level of risk. We focus sharply on the nature and degree of risk associated with each investment and with the unavoidable trade-off between risk and return, establishing clear and actionable entry & exit strategies for every investment.
We manage risk through prudent diversification and the judicious use of put and call options.
"Never enter a place unless you carefully establish how you will exit from it."
— Maurice Leblanc (1864-1941) in "Arséne Lupin"
Should I invest my money in
Stocks? Bonds? CDs? What?
Our Investment Discipline
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Our starting point every October is a macroeconomic overview of major industrialized countries, their GDP per capita, populatioin, economic reach and geopolitical sphere. This process leads us to make certain macroeconomic assumptions about the economic and investment environment we may face over the next few years.
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Next, we screen for industries that stand to benefit from the economic environment envisioned by our macroeconomic assumptions.
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The resulting industries are then subjected to an in-depth review in an effort to ferret out potential investment targets.
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Once investment targets are identified, we thoroughly and critically analyze their financial structure, market presence, competitive position, cash flow generation, prospects for profitability, etc. with the aim of understanding their relative strengths and weaknesses.
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Only then do we decide whether investing in a particular target may be warranted, in which case we establish the maximum price we are willing to pay and clearly specify the conditions that would cause us to exit from the investment.
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After an investment is made, we constantly monitor it to ascertain whether the original reasons for making the investment remain valid, or whether a change in conditions warrants a change in our investment posture.
Fixed income securities (bonds & preferred stocks): in addition to the process outlined above we pay particular attention to the financial strength of the issuer; its ability to generate free cash flow, pay interest, and repay principal; the relative seniority of the security being considered, that security’s coupon, maturity, duration, call and conversion features, as well as its credit rating.