Disciplines of our INVESTMENT PHILOSOPHY
Having an investment philosophy helps you stay true to your principles in the face of market fluctuations, fleeting trends and irrational investor behavior.
In our view, the market often overreacts to good and bad news, resulting in stock price movements that do not necessarily correspond with companies’ long-term fundamentals. At any given time in the market, there are certain stocks that are undervalued, not due to any fundamental weakness, but by stock prices that have been overly influenced by investor emotion. We see the potential value in these scenarios and work to identify these opportunities. As value investors, we actively seek stocks that we believe the market has undervalued.
Experience has taught us many things over the years and given us a philosophy about investing that can only come from such a long-term perspective.
Virtues of a successful investor
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Chasing the hot-performing investment category or making major tweaks to your long-term investment plan can sabotage one’s ability to build wealth. Instead, outline your long-term goals, develop a plan to work toward them and set the expectation that you will stick with that plan when faced with difficult periods for the market.
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Crises are painful and difficult, but they are also an inevitable part of any long-term investor’s journey. Investors who bear this in mind may be less likely to react emotionally, more likely to stay on course and be better positioned to benefit from the long-term growth potential of stocks.
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Investors who understand that timing the market is a loser’s game will be less prone to reacting to short-term extremes in the market and more likely to adhere to their long-term investment plan.
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Though periods of short-term volatility for stocks are to be expected, it is crucial to bear in mind that historically, stocks have often rewarded patient, long-term investors.
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Great investors have recognized the value of making decisions that may not feel good at the time but that will bear fruit over the long term – such as investing in areas of the market that investors are avoiding and avoiding areas of the market that investors are embracing.
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Almost all investment managers go through periods of underperformance. Build this expectation into your hiring decisions and also remember it when contemplating a manager change.
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Don’t make decisions based on variables that are impossible to predict or control over the short term. Instead, focus your energy toward creating a diversified portfolio, developing a proper time horizon and realistic return expectation.
Past performance may not be indicative of future results. There is no assurance that any investment strategy will be successful. Investing involves risk and investors may incur a profit or a loss. Diversification does not ensure a profit or protect against a loss.
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