My Strategy

My investing strategy involves the following steps:

  1. Examine structural trends for opportunities and threats. Structural trends are expected to last several decades and offer high probability outcomes.
  2. Study market cycles that are likely to have a major impact on medium-term investment performance. Here we react to market signals rather than make predictions because of higher levels of uncertainty.
  3. Focus on sector opportunities from the first two steps and identify stocks that display:
    • Strong earnings growth (or strong cash flows distributed as dividends or stock buybacks); and
    • Ability to defend their market position against competitors.
  4. Monitor targeted stocks for buying opportunities when:
    • Earnings multiples are low relative to dividend flows plus expected growth; and
    • Technical indicators reflect favorable market sentiment.
  5. Sell stocks in the investment portfolio if the enterprise loses its ability to defend market share or expected long-term earnings growth declines.
  6. At times we may buy cyclical stocks — including gold miners, fund managers, media companies, and building supplies — when technical indicators suggest opportunities. These are sold when market sentiment turns bearish.
  7. At times we may reduce overall exposure to equities and increase holdings of cash and interest-bearing securities when measures of market risk measures are high.

Next: Structural Trends

4 Replies to “My Strategy”

  1. Experience is invaluable in addressing the complexities of share behaviour. Probabilities are thus helpful considering whether to buy or sell a position.
    I agree that analysis of share performance is not an exact science, and if it were we would all be fools not to be billionaires.

    1. I think high speed trading has destroyed investor confidence in the fairness of the stock markets. But the exchanges are making millions charging HFT for colocation/high-speed connections from the exchange. And will simply ignore the long-term harm they are doing …..until it is too late.

  2. I agree with you Collin on HFT it scares me a little what is going on in the backgroud of the Exchange that we cant see or access.It is hard enough trying to evaluate a Co. with inside trading and not knowing if the directors are telling the truth.The only thing we really got is our charts. Regards Trevor

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