- I have to be able to explain in one sentence why I own the stock.
- I plan to hold it forever (although that usually does not happen).
- If it does not pay a dividend, there has to be a VERY good reason to buy the stock. Read this excellent article on dividend investing to learn more.
- I prefer companies with recurring revenues (such as pharmaceuticals, Starbucks) as opposed to manufacturers and companies where products are purchased sporadically.
- I favor companies that take advantage of a major demographic trend (such as Baby Boomers).
- In spite of spending most of my life in technology, I don't purchase very many technology stocks. I own a smattering (Apple, Google), but they tend to be underweighted. Technology moves too quickly for me and owning a technology stock might violate my first rule above.
I'm often asked if I will manage my clients' money. The answer is no, for a number of reasons:
- I believe strongly in the entire financial plan. History shows that the actual selection of individual stocks and bonds is not nearly as important as asset allocation and how the entire plan works together - income, investment, and spending. We won't invest for you directly, but we will figure out your best asset allocation.
- There are many ways to successfully invest and build a portfolio. I am a very strong believer in just one method, which I detail below. I'm not sure I'd be acting in the best interests of all my clients if I only used this one technique (even it has been very successful).
- As my senior citizenship looms, I don't have a yearning for hundreds of panicked phone calls from clients when the market is down. (If you're currently freaking out about the market, read this.)
- I'm not a licensed broker, so while I can give advice, I cannot actually take over the funds and invest them.
That being said, I have a long history of successful investment management and a solid philosophy of what works and what doesn't (backed by empirical evidence). Under the heading of "putting my mouth where my money is", I will share these theories and actual practices with you in the posts below. These are not necessarily recommendations on my part, but it is an overview of the process that I do use for managing my own and my family's investments.