“The common intellectual theme of the investors from Graham-and-Doddsville is this: they search for discrepancies between the value of a business and the price of small pieces of that business in that market… I have seen no trend toward value investing in the (65) years I’ve practiced it. There seems to be some perverse human characteristic that likes to make easy things difficult. The academic world, if anything, has actually backed away from the teaching of value investing over the last 60 years. It’s likely to stay that way. Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham & Dodd will continue to prosper.”
I make no claim to be as knowledgeable as Warren Buffett, however, that doesn’t mean I don’t try to use his advice the best I can.
For me, investing is primarily about risk management – as Buffett repeatedly comes back to – and secondarily, about trying to find asymmetric upside on enough of my investments that the risk I do take is worth it.
I have found that the best way to manage risk is to stick to investing in good to great companies. I know this sounds like common sense, but, as amazing at is seems, clearly more than half of investors do not really even try to only invest in good to great companies.
The two most common flaws among today’s investors are these:
- Not taking the time to get to know the businesses and industries that they are investing.
- Becoming emotional, either greedy, or fearful, in response to price movements in assets.
As Warren Buffett has also said:
“Price is what you pay. Value is what you get.”
Most investors have no idea what the value of a company or aggregate value of an ETF is. Without that information, they have no way of knowing what a good or bad price to pay is.
Here at Fundamental Trends, we a 4-Step Investing Method that several top institutional investors use. With it, we find nations, industries and companies to build a universe of assets for potential investment.
When we screen things down to the company level, we have found that only about 5% of the stocks on the U.S. markets make my cut. That’s not a big percentage, but it is still 200-300 companies at any given time.
Once we have created our universe, we sort into 5 categories of stocks, called simply our, “Very Short Lists:”
- Sustainable Growth
- Dividend Growth
- Retiree Low Volatility Dividend
- Alternative High Income
From here, we do our foundational reading and a SWOT analysis that outlines the Strengths, Weaknesses, Opportunities and Threats a company faces. So, that’s a the short of it. After much more reading, we develop an investment thesis. Finally, we monitor each company from quarter to quarter, including any business developments in real time.
Our deep dives into companies are designed to help us place a true value on a company based on the business it is doing and likely to do in the next few years. Once we have that information, it is a simple math equation to decide what price ranges to invest at.
Again, it seems simple and common sense. The reality is that we have multiple analysts, including myself, working countless hours on finding a handful of good stocks to wrap around our Global Trends ETF portfolio, or for some investors, to be their core portfolio.
We know that no investor can do what our team can do. We know because, like you, we’ve all tried to go it alone. That doesn’t work. So, we work as a team.
Our promise to you is that we will take the time to learn what each company is about and convey that to you in a concise way. My experience, the ups and downs, have lead me to the point of being one of the top investment analysts in America. I am at your disposal. See my biography why I choose to offer my research to the public.
If you are not a member and on the fence, start with a Free Library Card, to get our legacy content, special reports and quarterly outlooks with gameplan. If you are impressed, then upgrade to a full membership that makes sense for you.
Best wishes and good investing,