Trading & Speculating versus Long-Term Investing
Mark Twain said, “There are two times in a man’s life when he should not speculate: when he can’t afford it and when he can”.
We do not speculate or change shares, and we make very few changes to our clients portfolios over the course of the year.
We keep capital gains tax in check, transactional costs such as brokerage low and allow unrealised gains to compound over time.
Long Term Investing
Our objective is to build enduring value for our clients through capital appreciation and dividends.
A long-term investor horizon can make a mockery of short-term "calls" of Wall Street. This is eloquently put by investing legend Philip Fisher:
“I remember my sense of shock some half-dozen years ago when I read a [stock] recommendation to sell shares of a company . . . The recommendation was not based on any long-term fundamentals. Rather, it was that over the next six months the funds could be employed more profitably elsewhere.”
We believe a combination of business-like investing and diversification reduces the chance of permanent loss.
At Kingfisher, we test underperforming investments for permanent impairment. We may conclude that the investment is unlikely to recover within a reasonable time frame, and we may liquidate the investment taking into account the short term considerations.
“Only when the tide goes out do you discover who’s been swimming naked” Warren Buffett.
“What we are trying to do is to take advantage of errors other make usually because they are too short term oriented or they over react to events or they over-estimate the impact” John Neff.