#asklbs02: regarding investment style

From now until 29-Jan, you could access https://app.sli.do/event/lxmezhxh and ask questions anonymously.

Question:

1) How would you classify your investment style? Would you recommend value investing as the base with consideration for growth or the other way around?

2) Do you think investing based on company’s fundamentals are the main way?

Answer:

(1) I am mainly influenced by the Graham-Schloss form of investing, looking at assets first and then earnings later.

I am particularly attracted to companies weighed down with problems that are well protected by its balance sheet, particularly if it comes with a history of sustainable dividend. I don't have special insights to any industry, as such, these companies tend to be "easy bets."

When it comes to earnings, I am also influenced by Paul Sonkin/Tobias Carlisle school of thought-- earnings should be examine from the private owner's perspective. 

So I would personally recommend that one starts off with the balance sheet first and then look at its growth; although I would add (unhappily) that the current market is acutely sensitive and efficient to growth investing. It is going to be tough finding bargains.

To quote someone, "there are too many people out there who have read their Graham-and-Dodd." The market is generally very efficient.

In short, I belong to the school of "I won't lose too much money if I am wrong, but my returns are going to be okay-to-good if I am right."

(2) Personally I would never deviate from my way of investing by value. No single method of investing or trading works incredibly well all the time.

Hence, one should have reasonable expectations. I don't expect to outperform the market by wild margins. I just want to beat it most of the time and then retire after 20 years. 

I am never going to match returns of someone who got it right with wayyyyy-out-of-the-money options.

I like the value way because it suits me like a pair of old jeans. Jeans might not be suitable for every occasion, just like value/fundamental investing isn't going to be vogue most of the time. 

But I think jeans is going to be around for a long time. Value investing will do reasonably well over decades. And because stocks are fractional ownership of businesses, business owners are inclined to act logically and rationally when there are significant value to price gaps.

There is no way in hell Elon Musk would privatize Tesla at current prices. 

But that doesn't mean someone buying Tesla shares today, would lose money tomorrow. And it is very hard to argue with success. You can't convince these people.

So I do understand where the growth investors are coming from. But I stick to my methods. It keeps me sane and sometimes the market can be very cruel.