Beyond The Headlines
When the market takes a seemingly unexpected turn in either direction, we often get familiar phone calls from clients. They tell us: “We know what you are doing (whether it’s buying, selling, or waiting at the time); we just wanted to hear your voice and wish you good luck.” There are no surprises; we value consistency in what we do, and so do our clients. Let me explain.
Consistency doesn’t mean to us the same returns year after year. Consistency means “steady adherence to principles, patterns of action.”
In our writing and conversations, you might have noticed certain unchanged principles. They are set in stone. The markets go up and down, policies change and shift, and corporate earnings rise and fall, but the underlying philosophy behind our investment style and business practice remains the same. That’s what gives us and our clients peace of mind.
The actual makeup of the portfolios will evolve and change to represent the best investment opportunities we see at a given time. Our stock selection, research process, and buying policy remain the same. We look for quality businesses with promising prospects that we can buy at attractive prices.
Over the decades, the list consisted of companies with tangible products like car parts, coffee makers, or candy to intangible ones selling software solutions to individuals and businesses, allowing them to communicate, work, find entertainment, and more.
We never limit our investment universe to any particular industry, and there have been just a few industries we chose to avoid deliberately. Still, if an opportunity arises and our research can back it, we are happy to pursue it.
Our consistency relies on a very disciplined, thoughtful investment approach that allows us to avoid the fads of the day. It is easier said than done, though. We do our best to be open-minded and optimistic yet rational. With every new initial public offering, we take a look and give new companies a chance. We might not buy them the day they are first listed, but if they are unique and promising, we’ll keep an eye on them until the price is right.
We are happy to correct our earlier assumptions, too. Needless to say, everything from bicycles, electricity, cars, laptops, and more were once considered short-lived fads, yet they proved to be a permanent fixture of our lives. We don’t want to miss out on less obvious opportunities, either. For us, the best telltale is profitability. A venture with no path to profitability is of no interest to us as investors and shareholders.
Bull markets and bear markets are part of every investor’s life. Late bull markets are times when many fail to talk themselves out of buying overpriced stocks that regularly drop the most not long after. We usually don’t have much difficulty waiting on the sidelines and letting market silliness unravel. In a bear market, many fail to talk themselves into buying even when prices are low. Here, we act gradually and decisively and start buying when stocks look attractive.
Investing is something we do day in and day out. Even if we are not actively buying and selling, we are reading, researching, testing our assumptions, and preparing for opportunities ahead. Our clients make money not when we buy and sell but when what we hold grows in value. It happens in three possible ways: a small business becomes bigger, a temporarily troubled business recovers and undervalued stocks become fairly valued. Ideally, we’d like to see all three occur together; that’s where the upside can be the biggest.
We also sell our holdings now and then, and we are equally consistent on that front, too. I’m often reminded how little attention investors give to a healthy selling discipline. It pays off both in bull and bear markets when hard choices must be made. It’s no different than a gardener weeding the garden. It’s an essential part of the process.
When the markets hit speed bumps at times, we appreciate that our clients already know what to expect. They know what we are looking for, researching, and possibly even buying when almost everyone else freezes and panics.
Investing is a challenging yet exciting and rewarding journey; the principles we follow tell us what, how, and when to do. That consistency allows us to keep a steady course no matter what the markets send our way. We are always ready, and you know where we stand.
The information provided in this article represents the opinions of Sicart Associates, LLC (“Sicart”) and is expressed as of the date hereof and is subject to change. Sicart assumes no obligation to update or otherwise revise our opinions or this article. The observations and views expressed herein may be changed by Sicart at any time without notice.
This article is not intended to be a client‐specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. This report is for general informational purposes only and is not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally.