There are a whole host of things we do as a matter of routine. We look for real strong competitive companies. We look for them especially when the markets become depressed and we can purchase them at market multiples or better yet, lower. We hold stocks for very, very long periods of time. With a turnover of about 10% to 20% per annum, this means that it is quite common for us to hold something for five to ten year periods. We maintain an optimistic attitude that mankind will solve the problems it encounters, even if it is done at a snails’ pace.
There are a whole host of things we do not do.
We do not use technical analysis at all and view it as something that has negative value. Readers are urged to read what Nobel Prize Winner Burton Malkiel has to say on the futility of technical analysis in his book ‘A Random Walk Down Wall Street’.
We do not generally purchase ETF’s (exchange traded funds – basically investments that track various markets) for they are loaded with mediocre companies.
We do not focus on dividend yield, as dividends are less tax-efficient ways of distributing wealth.
We do not buy IPO’s, for they generally are massive insider sales dressed to take investors’ money away.
We do not use mathematical models, and we urge investors to read ‘Models Behaving Badly’ to obtain some insight on the drawbacks of even the most sophisticated and well thought-out models. Similarly, we do not use market timing techniques and feel strongly they are counterproductive.
We do not buy illiquid securities and or micro cap stocks for they defeat the purpose of having solid investments.
These DOs and DON’Ts are not hard and fast rules, nor will all people agree with all of them. But this outlines some of the basic thoughts and approaches Tralucent takes to the investing world, and so we hope that you can see our point of view. If you’d like to discuss (or argue!) anything here, please do so. We always love a lively debate.