Investment Philosophy

The returns available to investors in financial markets are substantial, but they generally accrue primarily to patient, long term investors. It is therefore paramount that investors maintain a long-term focus.

A focus on equity investments is also likely to generate the best long term returns for investors. This is particularly true at the present time when the returns available on quality fixed income instruments are at historically low levels. The goal of an investor is to generate a return comfortably above the rate of inflation. For the vast number of people, the best way to do this will be through ownership of outstanding businesses through investment in the stock market.

Volatility is inherent in the investment process, and it can be one of the most stressful parts of investing. Since 1985 there have been five bear markets with declines ranging from 20% to 57%. Financial crises during this period have included the Stock Market Crash of 1987, the 1990 Savings and Loan Crisis, the 1997 Asia Crisis, the 1998 Russian Debt Crisis, the Tech Bubble of 1999, the Financial Crisis of 2008-9 and the Coronavirus Bear Market of 2020. Yet through this period the Dow Jones Industrial Average has appreciated 28 times. In other words, for every dollar invested in 1985 the value today would be $28. (When you include dividends the number is even higher). Investors should expect this volatility to continue. Importantly, expect volatility to come from unexpected sources, not from the widely watched economic indicators.