We invest primarily in growth stocks but at times will supplement these with more mature, lower growth dividend stocks or cyclicals.
We invest in growth stocks that stand to benefit from long-term (secular) trends expected to last a generation or more. Trends include the growth of renewable energy; online services; artificial intelligence; the Internet of Things; cyber-security; medical technology; ageing populations in developed economies and China; and an expanding Asian middle class.
We focus on sector opportunities from long-term trends that offer attractive growth opportunities and identify stocks that display:
- Strong earnings growth; and
- Ability to defend their market position against competitors.
Allocation to growth stocks may at times be as high as 95% of portfolio value.
Dividends & Growth
We sometimes invest in mature stocks with lower growth prospects if there are strong distributions to shareholders, through dividends or buybacks, and attractive fair value.
Allocation is limited to a maximum of 30% of portfolio value.
We also at times invest in cyclical stocks if we expect strong appreciation. This includes gold miners, physical gold & precious metals, oil & gas, metals & mining, and construction materials.
Total cyclical allocation is limited to a maximum of 30% of portfolio value.
Cash & Fixed Income
We maintain a minimum 5% cash balance in the portfolio to cover contingencies.
Fixed income includes term deposits, fixed interest ETFs, corporate bonds and mortgages.
Allocation to this sector will vary depending on our assessment of market risk. At times of elevated risk, cash and fixed income may exceed 70% of portfolio value.
We use both technical and fundamental analysis to select stocks for investment.
We only buy stocks that have both a favorable fair value and a bullish technical outlook. As a general rule, we also only sell stocks when both fair value and the technical outlook are bearish. The exception to the sell rule is when we decide that global market risk is elevated and seek to reduce overall exposure to equities.
We calculate the fair value of stocks based on expected future cash flows using our proprietary payback formula.
We assess the technical outlook using proprietary Momentum and Buy/Sell indicators.