Paul's blog

The superior performance of proven private investors like Buffett and Templeton – and economic scholars like Benjamin Graham and Larry Ellison– can be distilled into a single, disciplined approach that captures the essence of their investment strategies. This approach is fortified by best practices that attempt to sustainably do one thing – maximize benefits by using the following investment tools:

Diversification and concentration

Conscientious security analysis

A “price matters” orientation to capture excess returns

Money doesn’t manage itself. Asset allocation, diversification, security analysis and capturing excess returns don’t just happen. These tools require the “hands-on” management of a skilled, talented manager who can implement them with consistency and discipline, unencumbered by the four psychological poisons that can reduce investors’ returns.

Four Poisons

Recency effect

Endowment behavior

Fear and inertia

I think it is quite possible that our unemployment rate could rise to 15% and our economy could be stagnant, with little growth for quite some time. The global economy will also be slow as it attempts to recover from the excesses of the past. Industries, countries, institutions and consumers went wild during the past 10 years, borrowing to finance everything from TVs to wars. The world was looking for immediate gratification. Respect for the future, rational common sense, and normal virtues of prudence and responsibility went out the window. As a result we find ourselves in a world today that seems like cause and effect, and the very institutions in which we put our faith have lost our trust.

Often I am asked about our socially responsible investing and our core beliefs that guide our investment strategies. As investors that want to be responsible, thoughtful, and ethical in their investment themes, it becomes difficult with the landscape of ever-moving corporate management, investor’s fickleness and short-termism. Recently there has been an increased interest in Socially Responsible Investing (SRI). Since 1995 there has been a $190 billion increase in social screened funds according to the Social Investment Forum Foundation www.socialinvest.org.

This moment — the moment you are breathing — is all that exists. Our past feeds this moment with memories and beliefs. If we believe we can be rich, we can be. What is rich? Rich relationships? Lots of money? Financial freedom?

I think rich is a place. Rich is where our expectations are slightly below what we have. Is that confusing? Let me explain: Of course we can aspire to grow, and we don't need to settle for less than we want. This definition of rich merely means don’t obsess; don’t cry. It suggests that we reprogram our self-talk to say, "I would prefer to have," rather than "I gotta have, or I will have a crummy day." If we have a crummy day because we didn’t get what we wanted, we're letting addictions rule. In an addicted moment, no one is rich. In this moment, where you "prefer" rather than "gotta," you are rich.