2022

2023

Strategy

My investment strategy is simple: buy great companies at a reasonable price and hold onto them as long as I can. I try to find companies that may be unloved by Wall Street or fly under the radar. In particular, I view the companies I invest in not as a piece of paper but as ownership in a business. I want to own high-quality businesses that will grow and continue to generate profits for many years to come. I think Peter Lynch said it best in One Up on Wall Street: "Stocks aren't lottery tickets. There's a company attached to every share." 

I'm trying to beat the stock market consistently as Peter Lynch did during his tenure running the Magellan fund at Fidelity. While this may turn out to be an ambitious goal as many amateur (and professional) investors fail to beat index funds, I hope to achieve meaningfully higher returns than an S&P 500 index fund. While I have some money invested in a Charles Schwab Total Stock Market Index Fund (SWTSX) for my Roth IRA and the Vanguard S&P 500 Index fund for my 401(k), most of my money invested in the stock market is tied up in individual stocks. My benchmark is the S&P 500 index, which is the benchmark for many active mutual funds and stockpickers. 

I'm looking for companies with great balance sheets (little to no debt), high returns on investment capital (10%+), and consistent earnings growth. Valuation is another factor I look at and I try to avoid overpriced companies whose stock price have strayed far above their earnings line. Most of the companies that I invest in and will write about will meet all three of these criteria. Occasionally, I'll invest in companies that may not meet all three of these criteria because I see it as an interesting asset play or a potential turnaround. 

Ideally, I like to hold 10-12 stocks and be fully invested. I believe in concentration rather than diversification since I'm aiming to beat the stock market, not mimic it. As a result, I'll put more money into companies that I strongly believe in. While this may result in more volatile returns in the short run, I believe this will help me outperform the stock market in the long run.