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Managed Growth Portfolios for Aggressive Investors

Investment Philosophy

Most investors are looking for someone to actively manage their portfolio to maximize its return while taking reasonable risk.  This is what we do.   Our investment philosophy is simple and suitable for nearly all investors whose time horizon to reach their investment goals is at least five years.

High-Quality Growth Stocks
We build our portfolios with high-quality growth stocks from a variety of industries. We invest in U.S. stocks as well as foreign stocks traded on U.S. exchanges.

Profitable Companies
We only buy stocks of companies expected to report a profit this year as well as next year.  We don't invest in the hope of future profits.  We also believe that when a company makes a profit it puts a floor under the price of the stock during a selloff.

Strong Earnings Growth
We buy shares in companies that are in the top 30% of all stocks in earnings per share growth.  Over time, strong earnings growth drives stock prices higher. 

Growth at a Reasonable Price

We buy shares in companies when their valuation is compelling relative to their growth rate.  We demand that the price to earnings ratio on next year's earnings be lower than the year-over-year growth rate of the company's earnings.  We are always willing to pay more for a faster growing company's earnings but this makes sure we don't overpay. 

Rising Earnings Estimates
We also want to see upward revisions in analyst earnings estimates.  Rising analyst earnings estimates indicate stronger growth than previously expected for a company.  This also makes it less likely there is unexpected bad news coming in the near future because analysts are usually very cautious about raising their estimates until they confirm their revisions with guidance from their contacts at the company.

High-Volume Buying
We buy shares in companies that are under aggressive accumulation by mutual funds and other institutional investors.  This takes the form of higher volume on days the stock rises, especially to a new high.  Mutual funds and other institutional investors are responsible for a majority of shares traded each day.  If mutual funds are actively buying a stock, it will likely move significantly higher just from their demand for shares.  If mutual funds are actively selling a stock, it can make it nearly impossible to make money in that particular stock even if you think the company is doing well.

High Relative Strength
We are only interested in the strongest, best-performing stocks in the market.  If you are interested in outperforming the market averages it can't be done with stocks that are underperforming the market.  Stocks must be in the top 30% of all stocks in price performance relative to the market at the time of purchase.

Buy and Sell at the Right Time
We use technical analysis to find ideal buy and sell points in our list of fundamentally sound companies
As stocks trade, they trace out recognizable patterns that are created by investor psychology. An analysis of these price and volume patterns allows us to find the best points to buy and sell a particular stock.

Focused Portfolios
We will not overdiversify a portfolio.  We believe it is easier to beat the market with our best investment ideas.  We do not want to water down your performance with our 100th best idea.  Our portfolios will usually contain between 5 and 30 securities depending upon the size of the portfolio. 

Keep Losses Small
We try very hard to minimize losses
.  We will move our portfolios further into cash when we believe the outlook for stocks is not favorable.  It is very important to us to minimize losses because, in addition to the loss, there will be less capital left with which to make the money back.  A 10% loss can be recouped with an 11% gain while a 50% loss requires a 100% gain on the next investment to make up the loss. 

Long-Term Time Horizon
We try to produce superior returns over time. Because we manage focused portfolios, which can be volatile, we do not try to beat the market month to month. We focus on our performance over one year periods.

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