In my recent post I discussed the importance of building your investing toolbox.
For a long time I’ve followed a short list of investors, professional and retail, respecting their opinions and work. I read or listen to their perspectives and from time to time incorporate those lessons into my investments and approach. One of my major mistakes from 1999-2002 was trying to copy the activities of specific investors hoping to piggyback on their success. This was mixed with moderate success and a few failures.
What I should have done was what I do now. I dissect their decision and actions and focus on where they went right or wrong. I study their method of valuation, the qualitative and quantitative elements that factored into the decision and draw knowledge from why it worked or didn’t.
One individual I’ve followed and learned a lot from is Rick Konrad. If you haven’t read anything about him you should read his stuff.
Rick is an investor I’ve followed since 2009. We’ve had a few conversations also, but like myself he has the ability to “Bring in the Buffett” to help an investor understand good investing principles.
His most recent writing was titled, Value Investing and Technology Stocks, which can be found on the website of Value Architects Asset Management.
What I like about this article is the reference from Warren Buffett that value and growth are joined at the hip. As Rick says, “As value investors, we love to buy growth companies, but subject to an important proviso…that we are not overpaying for that growth.”
This is a great definition for my basic investing approach. I focus on both the growth of return of equity and book value in the companies I buy because I want growth in the presence of reasonable value. I match this with dividend growth, assess if an investment meets my criteria for allocation of capital and then complete an extensive qualitative analysis on the company (Value Rules).
Rick also includes a powerful tip, “Great investors have applied a mosaic of thought processes to come up with their conclusions.”
Take the best qualities from a successful individual and incorporate that into my practice. It’s that simple.
You can read about many of my practices in my Top Posts section found in the header of this blog.