There are many different ways to invest. Some do it with via growth, others via dividends and some commingle the both to produce a hybrid stratagem. Whilst it is nice to recognize market philosophies and having an ethos is important to understand the manager, it would mean nothing, or less than nothing, if said plan of action ended up on the bad end of money losing catastrophes.
Nevertheless, here are my thoughts on this pressing matter:
Let’s say for example I got run over by a very large tractor trailer tomorrow and my family had to identify the body and eventually place a nice tombstone on my final real estate purchase: would the portfolio I left behind survive me well?
In other words, did I have a bunch of PEPE coins in my crypto account or small capped biotechs in my portfolio, eagerly awaiting FDA news? If so, I am afraid they would begin to hate me not too far past the time they tossed flowers at me before saying goodbye. I think it’s fair to say that in most scenarios, I prefer very large companies that have already scaled, because the winners have been chosen and those who have scaled will continue to do so.
What makes a winning business? Profits.
How do we measure those profits? EBITDA
Barring unpredictable events and the unfortunate recession and/or market panic, buying highly profitable companies with strong margins has been a winning strategy and is the bedrock of any lauded investor. While it’s true, trading can be bountiful and I certainly partake, I think it’s also important to recognize and accept the fact that, in the end, fundamentals drive share prices and make all of those charts look real beautiful, not the other way around.
