Wow, Anirban that’s quite an assertion from one of the folks I consider to be one of the really smart contributors to this board.
So I’m one of the understudies here, I really don’t have a great deal of sage advice to impart to the investing newcomers. But this comment, …I think of these four as fulfilling different roles in an investment portfolio. is really difficult for me to understand.
Brittlerock,
Thanks for the compliments. As I warn time and again, I will get again say that my thinking is just mine, it’s no advice, and that anything I say should be looked at with lots of skepticism. You probably are much better placed to talk about investments than I am.
Okay, so with the disclaimer out of the way, I will try to address your question.
My goal is to grow my portfolio at a healthy clip. I am also not drawing down on it and 'm adding funds to it although I have decreased how much I add. I also have a 15-20 year timeframe before I might consider drawing down from this portfolio.
I apply a theme based investment approach. I generally look for mega trends and then identify companies in that trend. I look at e-commerce and related businesses as one big trend, where the opportunities are enormous. One way to invest in this trend is Amazon. It’s demonstrated the ability to continually invent and grow its sphere of influence. I see no signs of that changing and see the market opportunity continuing to expand. So I see it as a good investment for the long haul, one that can act as a portfolio anchor.
With something like SKWS, I look at them playing in a different theme, IoT and mobile growth. That’s fine too but it’s covering a different mega-trend and its in a different industry. SWKS is in the semi-conductor business, which is cyclic and a pretty though industry. So this one looks good to me but needs to be closely watched and probably exited before the cycle ends, or before cheaper vendors eat SKWS’ lunch. This looks like a more medium term investment opportunity, one where I would need to watch the proceedings very closely. I do that for companies like SWIR and CAMP, so I have enough exposure to IoT, so for now SWKS is out for me.
For my portfolio, I look at some stock which I expect to hold for a long time because of the market opportunity and the demonstrated competence of the management team. My expectation is to derive superior gains over the long term. AMZN, NFLX, TSLA, FB, MELI, BOFI, WFM fall in this category.
Then, I have some investments where either the pricing and/or the near term growth outlook look good; these may be companies that are executing nicely and strongly growing earnings. I see CRTO, EPAM, SKWS, and Sketchers in this category.
So it’s really a way of squaring of the opportunity, some looking to take advantage of big trends, growing markets, and new verticals versus taking advantages of more near term opportunities in well developed markets.
Anirban.