Concentration is Key

In the investing world, the topic of diversification often arises. As money managers, we advise clients on their stocks, bonds, mutual funds, hedge funds and real estate funds, among others. The intellectual stimulation of this job is hard to beat. We do believe portfolios should be diversified across asset classes. But, when it comes to owning simple common stocks, concentration is the way to go.

My friend David Kaufman recently published an excellent article in the Financial Post on the merits of owning a concentrated portfolio of stocks. David writes for all readers, regardless of their familiarity with high-tone investment language, and his column is worth reading. You can find it here.

David makes a simple point. With the proliferation of exchange traded funds and, I will add, the number of smart people that have flooded into the investment business, it becomes difficult to outperform the stock market.
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The Importance of Compounding

For those readers who know me well, this is a familiar topic. I am a major advocate of encouraging young people to start investing early. The principal reason being that if you start early enough, the prospect of becoming rich is almost guaranteed.

A little known fact is that over the course of the 20th century, every $1,000 invested in the S&P 500 stock market index, with dividends reinvested, would have become about $19 million. What is even more impressive is that over most of that time, no real work was required by the investor. You could have beenRead More »

A Brief History of Stocks

My mentor in this business often tells me that to be successful, knowing some financial history is essential. Many people would argue that it’s always good to know more about the world we live in but, in a more practical sense, being well informed on history is very helpful to the investment process.

Market Fluctuation — Not As Uncommon as You May Think …

We have all been reminded, recently, that the stock market is a volatile beast. This is a fact investors often forget, especially in the good times. Some of you may be surprised to learnRead More »

Find Value in Publicly-Traded Alternative Asset Management Companies

U.S. publicly-traded alternative asset managers are one of the few places in the stock market today where there can be lots of value. The industry is attractive but generally misunderstood by investors because of its relative newness, perceived earnings volatility, and the complexity of its accounting. While analysts today will point out that these firms can take advantage of the current opportunities in distressed debt and a depressed energy sector, alternative asset managers are even more important in a world where bonds are Read More »