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Investors Should Only Swing at Quality Pitches

Warren Buffet suggested to pretend you only get 20 trades in building your portfolio. That is, over your entire lifetime of evaluating potential investments–only say “Buy” 20
Jordan Kimmel is a Portfolio Manager for Gitterman Wealth Management. Phone: 848-248-4290Email: [email protected] With over 30 years of experience in the financial services industry, both as a retail broker and fund / portfolio manager, Jordan is the creator of the FACTS® Stock Selection Process, which employs a unique holistic and quantitative analysis on the integrity and sustainability of over 2,000 US companies. Jordan’s FACTS® method identifies organizations with: Financial Strength Accounting Conservativeness Corporate Integrity Transparency Sustainability / ESG (Environmental, Social, and Governance) Metrics FACTS® analyzes the largest and most liquid companies, and also incorporates Jordan’s Magnet® Investment Strategy, one of the first strategies of its kind to combine the best tenets of value, growth, and momentum of company fundamentals. Magnet® has been licensed to several leading institutions around the country, and Jordan appears frequently on several major financial TV networks, including CNBC, Fox Business, Bloomberg, and ABC News, among others. He has also been quoted extensively in several publications, including Forbes, The Wall Street Journal, and U.S. News & World Report. He is the author of two books, the most recent being “The Magnet Method of Investing.” (Wiley, 2009).
Jordan Kimmel is a Portfolio Manager for Gitterman Wealth Management. Phone: 848-248-4290Email: [email protected] With over 30 years of experience in the financial services industry, both as a retail broker and fund / portfolio manager, Jordan is the creator of the FACTS® Stock Selection Process, which employs a unique holistic and quantitative analysis on the integrity and sustainability of over 2,000 US companies. Jordan’s FACTS® method identifies organizations with: Financial Strength Accounting Conservativeness Corporate Integrity Transparency Sustainability / ESG (Environmental, Social, and Governance) Metrics FACTS® analyzes the largest and most liquid companies, and also incorporates Jordan’s Magnet® Investment Strategy, one of the first strategies of its kind to combine the best tenets of value, growth, and momentum of company fundamentals. Magnet® has been licensed to several leading institutions around the country, and Jordan appears frequently on several major financial TV networks, including CNBC, Fox Business, Bloomberg, and ABC News, among others. He has also been quoted extensively in several publications, including Forbes, The Wall Street Journal, and U.S. News & World Report. He is the author of two books, the most recent being “The Magnet Method of Investing.” (Wiley, 2009).

Warren Buffet suggested to pretend you only get 20 trades in building your portfolio. That is, over your entire lifetime of evaluating potential investments–only say “Buy” 20 times! Buffet reminds us the market will continually serve up pitches but you need to be so selective you pass on almost all of them.

Personally I liked to swing at almost any idea the ranks out highly on The Magnet® Stock Selection Process that flashed a “technical buy signal.” I have done this because I set “mental stop losses” to try to limit my losses on ideas that do not work out and because you never know which ideas will be the biggest winners. After all these years in the business, I have decided on a middle ground. I am only going to swing at quality pitches.

Buying quality sounds good, but how can you make the distinction between high and low quality. Ask yourself, “Is this company clearly one of the leaders in its sector or field of business?” Does the stock trade at a level where at least small institutions can buy in? Have at least a few institutions already taken a position in the stock? Does the stock trade above a hat size? I am not suddenly advocating buying “market favorites” but I have added an extra layer onto my Magnet Process. I call them Magnet Elites. I’ll share more of what makes them “Elite Magnets” or Magnet HQ in the next several weeks.

The rear view mirror provides great lessons! You need to learn from your successes as well as your failures. My best short-term profits have come from the smaller more speculative companies Magnet has identified when they were tiny emerging companies. However, the best long-term profits have come from those companies I was willing to hold through corrections. So while I’ll occasionally still see short term trades I want to make, my personal focus is now on the highest quality companies. Less trades, more quality pitches!

Longs: ARRIS Group, Inc. (ARRS)Emerge Energy Services LP (EMES)San Juan Basin Royalty Trust (SJT)

Shorts: NetSuite Inc. (N)Teck Resources Ltd. (TCK)AdvisorShares Ranger Equity Bear ETF (HDGE)Direxion Daily Small Cap Bear 3X ETF (TZA)

By Jordan Kimmel, Chief Investment Officer at Investview, Inc. (INVU)

 
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