investment Philosophy / Process
My investment objective is for long-term growth through capital appreciation. My investment style could be described as risk-seeking but not speculative where I see the growth opportunities outweighing the risks. I focus on old-school fundamentals, things like competitive advantage and underlying business strength, revenue growth, earnings growth, valuations (P/E), balance sheets, cash flow, and return on investment. This could be described as growth at a reasonable price. I could be wrong. I’m aware that equity markets can be volatile - they have been and will continue to be. Investors who are not familiar or comfortable with these facts of equity investing should not use this site as our investment objectives and time horizons will not likely be compatible. While a stock going down can be frustrating, I might be more willing to stick with it or even increasing my position. Alternatively I might sell a stock while it keeps rising. I do not expect my trading to be perfect but I hope it results in my portfolio experiencing superior growth in the long term.
Why do investors invest? Whether an individual, institutional investor, or a company investing in its business, our objective is to earn a return on our investment which is a measure that can be quantified. The question is “what is an adequate return on investment?”. The best measure for return on investment is income after tax, not cash flow, not EBITDA (there is an economic cost to depreciation in the form of future investment and maintenance while interest expense and income tax are real costs), nor some other invented measure. I'm a generalist (not tied down to a specific sector) but that does not mean I will invest in every sector at a given time. I look at all companies and industries through the same lens while the sell side and institutional investors tend to get used to their silos and conventions for those silos which may differ from other silos. To be sure, there are economic definitions of net income and accounting definitions so I will often make adjustments to the accounting net income. Some of those adjustments will be real economic impacts that some people might ask “why are you excluding that, it’s real” which could very well be the case but I likely treat that as a balance sheet item rather than an operating item worthy of the income statement.
The initial deployment of my portfolio might cause people to ask “why did Jamie buy that after such a dramatic increase?”. It’s important to keep in mind that my portfolio is transitioning from my investments at my previous employer, some of the holdings will be the same and some will be different. Purchasing after a big increase might just be me wanting to maintain the exposure I already had although it could be at a similar, lower, or higher weight.