Focus on the basics
Picture the following person: she has a high income and it’s only going up. She spends less than she makes and has accumulated significant savings. Isn’t this the kind of person you would expect to continue doing well in the future? Of course you would.
If you want to invest in a business, that business should resemble exactly this type of person. You want strong and rising revenues, with expenses under control, so that the company is very profitable. And you want accumulated savings that give the business flexibility to make more good decisions in the future.
Stocks are ownership positions in real operating businesses. You should treat them that way—by partnering with successful people. Can you even picture doing the opposite? Would you buy a business with declining sales, losses instead of profits and piles of debt? Of course you wouldn’t.
But when investors look solely at stock symbols and stock prices, they trick themselves into owning subpar businesses, even if just on a temporary basis. If you wouldn’t do it with a real business, you shouldn’t do it in the stock market.
Our investment philosophy is that you should invest in companies just as you would invest in a person—follow past success. That’s not going to be a perfect predictor of future success, as all investment disclaimers warn, but doing the opposite would not be reasonable.
“The race is not always to the swift, nor the battle to the strong; but that is the way to bet.”
Best regards,
Evan McGoff
Dock Street Asset Management, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. You should not assume that any discussion or information contained in this letter serves as the receipt of, or as a substitute for, personalized investment advice from Dock Street Asset Management, Inc.
It is published solely for informational purposes and is not to be construed as a solicitation nor does it constitute advice, investment or otherwise.
To the extent that a reader has questions regarding the applicability of any specific issue discussed above to their individual situation, they are encouraged to consult with the professional advisor of their choosing.
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Our comments are an expression of opinion. While we believe our statements to be true, they always depend on the reliability of our own credible sources. Past performance is no guarantee of future returns.
