This investor blends Warren Buffett’s approach with dividend investing
If you’ve never found this blog before and you’re an investor you’ll find countless helpful, insightful and educational articles published since May of 2007 when I first started documenting my thoughts, habits and investing styles.
Fast forward almost 10 years and 350 posts and I’m starting to write a lot less. That doesn’t mean that I’m less interested in sharing; I’m just more selective with my time balancing my young family, my career & clients and my own portfolio. As I’ve matured investing has become less about my ego and more about my efficiency. There’s rarely a day that goes by where I don’t read something small on one of my investments, but investing hasn’t been the same priority it once was now that my wife and our two young boys needs my attention instead. We are expecting our third in the fall of 2016 by the way!
I can provide seven broad principles that guide my investing approach and generally define me as an investor. These haven’t changed in the past 5 years and very likely won’t in the next 5. These seven principles can be seen in each of my portfolio holdings and broadly in most of the content on this blog. None of them are a mystery or surprise, but many are overlooked despite the fact they will save you time and money.
• Invest only in companies you know, understand & research
• Concentrate on cashflow, dividends and Enduring Value
• Diversify appropriately along different assets, sectors, regions & currencies
• Focus on capital preservation (never lose money) and allocation of capital
• Don’t tinker with a portfolio that doesn’t require tinkering
• Avoid unnecessary risks
• Be consistent, never comfortable
Investing successfully involves a focus on being consistent without ever becoming comfortable in what you do. While tinkering with a portfolio can create too much turnover and be detrimental to your returns an investor rarely wants to have a set it and forget it investment portfolio (unless you’re indexing).
Successful investing never involves complacency. An investor should always be striving to improve, to understand more and better recognize opportunities and threats. I’m not endorsing timing the market; in fact I believe 100% of the time you’re better to be fully invested. What I’m supporting is knowing your money, what you’re invested in and being accountable for it. I don’t invest on behalf of my clients because I want them to own it. I want them to be the one in control with me as their coach.
It is also important to be humble and check your ego at the door when assessing your portfolio. Numerous times I’ve opened myself to constructive criticism from my peers to act as a second opinion and taken their criticism to heart.
Remember that investing is about building wealth, not losing money. At the end of the day an investor never wants to be comfortable; you just need to be consistent. Focus on reducing your losses and you’ll be surprised how the gains fall into place.