(2011-10-15)robertson - AAII Washington DC Metro Chapter

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Successful Long-Term Investing:
The Journey
October 15, 2011
Presented by:
Mark Robertson
Founder & Managing Partner, Manifest Investing
[email protected]
Successful Long-Term Investing: The Journey
No investment recommendation is intended.
This is an educational demonstration.
The information in this presentation is for educational purposes only and is
not intended to be a recommendation to purchase or sell any of the
stocks, mutual funds, or other securities that may be referenced. The
securities of companies referenced or featured are for illustrative
purposes only and are not to be considered endorsed or recommended
for purchase or sale by Manifest Investing or AAII or NAIC/BI. The views
expressed are those of the instructors, commentators, guests and
participants. Investors should conduct their own review and analysis of
any company or fund of interest before making an investment decision.
Securities discussed may be held by the instructors in their own personal
portfolios or in those of their clients.
Successful
Long-Term
Investing:
What are the
most powerful
The Journey
lessons learned
from multiple
decades of successful long-term
investing? Join us as we explore
best practices and examine the
key success factors based on
working with the most successful
investment clubs and individual
investors.
Successful Long-Term Investing:
Most important
factors for
The Journey
selecting long-term investments
Most important components of
fundamental analysis
Key aspects of momentum and
sentiment: technical analysis
Successful Long-Term Investing: The Journey
5
Successful Long-Term Investing: The Journey
6
Successful Long-Term Investing: The Journey
Rappahannock (2008-Current)
Rate of Return (IRR)
5.0%
4.0%
Club
3.0%
2.0%
S&P 500
Overall annualized
relative return is
(+5.4%)
1.0%
0.0%
-1.0%
1-Year relative return is +14.4%
Successful Long-Term Investing: The Journey
8
Successful Long-Term Investing: The Journey
Successful Long-Term Investing: The Journey
Successful Long-Term Investing: The Journey
11
Successful Long-Term Investing: The Journey
1. Commit. (Invest regularly)
Study opportunities carefully.
2. Buy high-quality companies
when they’re on sale and Hold ...
As long as it makes sense to do so.
3. Prudently diversify by size &
sector and allocate.
Be a diligent owner.
Experienced investors should be
willing to explore deep-value
opportunities and engage capital
preservation strategies.
Successful Long-Term Investing: The Journey
Growth: Diversify by Small, Medium & Large
Lost Decade
13
Successful Long-Term Investing: The Journey
Be patient. Be disciplined. Imagine.
14
Successful Long-Term Investing: The Journey
Successful Long-Term Investing: The Journey
Successful Long-Term Investing: The Journey
Do Moats (Quality) Matter?
Successful Long-Term Investing: The Journey
18
Successful Long-Term Investing: The Journey
Average = -19%
19
Successful Long-Term Investing: The Journey
Establishing Expectations
Forecasts
1. Growth
2. Profitability
3. Valuation
20
Successful Long-Term Investing: The Journey
21
Successful Long-Term Investing: The Journey
Big Picture
Turbulence, Temporary or Terminal?
Thoughts, Actions?
Successful Long-Term Investing: The Journey
23
Successful Long-Term Investing: The Journey
Gauging Momentum: Relative Strength Index (RSI)
RSI is based on closing prices
www.StockCharts.com
Successful Long-Term Investing: The Journey
Few Moments with Desmond & Elder: Sentiment
http://www.ritholtz.com/blog/2011/02/qa-paul-desmond-of-lowrys-part-ii/
Successful Long-Term Investing: The Journey
Changing of the Colors: Advent of a Bear Market?
Successful Long-Term Investing: The Journey
Where are we “now?” Potential tipping point?
27
Successful Long-Term Investing: The Journey
Selling a stock is not un-American. Don’t
hold because you’re stubborn and don’t let
the tax tail wag the decision dog, either.
Take advantage of selling opportunities
when you have a good reason.
1. You need the money.
This one is personal. Your own life circumstances (college, a
vacation, new car, new house, doctor bills, child’s wedding, bail
money, church offering plate) dictate the need. Update your
company studies and sell the one that makes the most sense,
often the one with the lowest expected return.
Source: “When to Sell: The Challenge of Reason” – Better Investing (September 2004)
28
Successful Long-Term Investing: The Journey
Don’t be afraid to sell.
Portfolios CAN be improved!
2. Because fundamentals (quality) are in
decline.
Watch changes in management, slowing growth rates, declining
profit margins, weird footnotes... and the FBI and SEC.
3. Because you can make the portfolio
Better!
Improve the expected returns. Maintain the quality of the holdings.
Keep the overall sales growth forecast (or dividend yield) strong
enough. Prudently diversify.
29
Successful Long-Term Investing: The Journey
1. We’re here for the returns. Build an
understanding of and expectations for your
companies.
2. Quality matters. Excellent companies persist
and provide protection during bear markets and
corrections.
3. Design and manage portfolios with an
emphasis on return forecasts, overall quality and
the average growth of the holdings. Rinse.
Repeat.
Build an awareness of the tidal powers of
momentum and sentiment. Discover discipline
and practice patience.
Successful Long-Term Investing: The Journey
Successful Long-Term Investing: The Journey
Successful Long-Term Investing: The Journey
Successful Long-Term Investing: The Journey
Successful Long-Term Investing: The Journey
Successful Long-Term Investing: The Journey
Successful Long-Term Investing: The Journey
Successful Long-Term Investing: The Journey
Trends/Forecasting …
15%
10%
5%
2013
2010
2007
2004
2001
1998
1995
1992
1989
1986
1983
0%
20-year trailing average of ~3% ... Larger sample at 5.3%
Successful Long-Term Investing: The Journey
Housing Price Index (Warren/Troy/Farmington Hills) …
15%
10%
5%
2013
2010
2007
2004
2001
1998
1995
1992
1989
1986
1983
0%
-5%
-10%
-15%
20-year trailing average of ~3% ... Larger sample at 5.3%
Successful Long-Term Investing: The Journey
Successful Long-Term Investing: The Journey
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