...In finding undervalued companies.
...In going against the norm.
And as a result, I’m able to build wealth for my clients.
I know that I can have what I want in life if I help other people get what they want.
I choose to work with every single one of my clients because they’re people who believe what I believe.
The result is less important than the process because we cannot control the result, but we can control the process.
Every successful entity has a process that fuels excellence.
People often invest in companies without knowing the answers to two questions that play a critical role in the investment process:
Do you understand the business?
Before you buy, you should understand what the business model is, what is its competitive advantage, who runs the company, how big is the barrier to entry. Can an idiot run the company because sooner or later one will (to paraphrase Warren Buffett), and how stable and predictable is it?
How much is the business worth?
Know the true value of the businesses in which you want to invest. What a business is worth and what its current market value is, more often than not, are two very different things. The basic economics of a business are: (1) how much real cash flow the business generates relative to (2) how much capital has gone into the business over its lifetime.
At times, you will underperform based on a value process.
A good portfolio manager has a process and stays true to that process, without adjusting and altering according to market fluctuations.
Without a proper process in place, investors change their approach according to how the market is performing in relation to their investments. If a process is constantly under scrutiny to the point where reactive changes are continually made, well, this isn’t an effective process.
We are more irrational than rational beings. In fact, science shows that if we were 100% rational beings, we never could have evolved as a species.
We make decisions consciously but act emotionally. It isn’t all about IQ: it’s also about mindset.
And the best mindset for an investor is one that strikes the perfect balance between a contrarian thinker and a calculator.
I believe that a skilled portfolio manager is not afraid to do something different.
By working with people who believe what I believe, together, we step across the invisible line, we challenge conventional and flawed thinking, and we achieve concrete results.