Complimentary Investing Styles

     Anyone who has read my past posts knows that my investing style leans toward the value discipline. Unfortunately, this method of investing has under performed for the last 10 years. So how do I make money in this era of growth investing? The answer lies in a complementary blend of value and growth stocks held in my portfolio. If all I held was value stocks, I would get depressed every time I reviewed my brokerage statements In order to stay interested in the current market and not always hold a bag of losers, I try to buy some of the hottest stocks with unreasonable valuations. Hopefully, these companies will continue to be successful and their earnings will grow into their valuations. I have learned my lesson by missing out on the gains of Amazon, Netflix, Alphabet, and Priceline. It doesn't take a lot a shares of an expensive stock like Facebook or Tesla to rack-up a nice gain in these rapidly appreciating stocks. While.these investments are garnering all the headlines, I also like to bottomfish for the afflicted companies like Boeing and Kraft Heintz. Sometimes these hardship cases take years to find their way. Sometimes they never do, but like I mentioned in my previous post, large, well established companies usually survive. My main concern is to not pay too much for an ailing company. This is when the lessons about ratio analysis and charting come into play. Buying at or near the bottom can be as rewarding as owning high flyers, it just takes longer. In summary, diversification is not just about owning stocks in different sectors and market caps, a complementary blend of growth and value will produce returns in almost any market environment. 

The Blind Squirrel Takes A Random Walk

     What the hell am I talking about? The random walk refers to a book written by a Princeton professor named Burton Malkiel. He penned "A Random Walk Down Wall Street" in 1973 to argue that individual investors are foolish in trying to "beat" the market and should just invest in a passive mutual fund instead. This "Efficient Market Theory" postulates that every event or potential outcome is already baked into the stock prices of any company involved. After all, there are some very smart people who make a very good living just watching everything that goes on in the world and adjust their large portfolios accordingly. I'm sorry Burton, but this blind squirrel just didn't buy into this academic crap when I was in college and I don't now either. The only reason that I don't outperform the market averages is because I'm too lazy to do the research necessary. There's an old saying that "Even a Blind Squirrel Finds a Nut Eventually", well buying stocks of companies that are struggling today can  reward investors tomorrow. Not all companies will survive but a little research can tip the scales in your favor to identify the winners. The key to making money in stocks is to simply be invested and stay invested. When things are not working out, find out why. In my 47 years of investing in stocks there are only a few times when things were hopeless for a position that I held. In this day and age, there are usually remedies for companies that can't seem to right their ship. Often an activist investor gains board seats and demands corrective action. Companies like Kraft Heintz, Boeing, Johnson and Johnson, General Motors, Ford, Schlumberger, and many others have a good chance to turn around. I was advised many times not to buy Tesla stock but look what it is doing now. Not many investors believed in Amazon until it took off like a rocket. I can still remember when Apple was a basket case and looked like it would fail. I didn't understand how Google could make money from a search engine but they did. I wish I wouldn't have listened to the pundits that covered the stock.