The BSMF investment philosophy is simple, really: make money. Toward that end investments will include many companies from many different industries and sectors – large cap, mid cap, and small cap.
Trading is not a big part of most days for BSMF. If there is a need to balance the assets or unload a loser, there will be some buying and selling. For instance MJNA was a recent sell. Bought when it looked like there was a lot of excitement surrounding the up-and-coming cannabis industry, MJNA has shown no ability to generate any interest in their stock, nor has their been any indication that they’ve figured out how to monetize their ideas successfully. This has been rather a constant, so far, in the fledgling cannabis industry. Selling cannabis semi-legally has not yet created any breakout stocks.
Stocks in the portfolio are all considered to be companies whose shares will increase the value of the portfolio over a long term, either by growth or by dividends. Sometimes, luck occurs, and we get a company like Apple that starts out as a growth buy and turns into a dividend producer while continuing to grow. The hardest part of having Apple in the fund is having to sell shares to keep it from taking over. That’s gotten to be a problem with Nvidia and Tesla recently. As problems go, though, it’s not a bad one.
While the bull market is raging in the first year of the Trump administration, we’re trying very hard not to get caught up in the party. Warren Buffett once said, “Only when the tide goes out do you find out who’s been swimming naked.” The best way to avoid being naked is to have solid companies producing solid profits at the foundation of the investments. It’s also good to have growth companies that have good prospects for continued growth. All that requires staying on top of the news.
Market news, quarterly reports, industry reports, company correspondence and blogs are all lovely things – good information. What’s going on in the rest of the world, and how does everything fit together – including companies in the portfolio – is vital.
When the street declares a stock “hot” and all the hotshot mutual fund managers hop on board to drive the price up is a great time to sell a little of it to buy something that pays regular dividends. That works best if you bought it when they were all calling it a loser. That trick is accomplished by study of what’s happening and who’s doing it – digging through the internet for hours and hours to find out what company is supplying a particular widget to the industry being researched – who their competitors are – and whether, in high tech anyway, it’s going to be one company’s hardware and software or multiple companies involved in hardware and software for the same solution. It’s how Nvidia ended up in BSMF at less than $20, and Tesla at less than $30.
The last and most important piece of the BSMF philosophy is: Analysis are mostly very smart about money things. They have learned to speak the language of Wall Street, brokers, bankers, traders. They are not, necessarily, experts in the industries they cover. Time is necessary to become expert at something and we only have so much time. Analysts don’t have any more time than anyone else. Reading and listening to what they have to say has some value, but it cannot substitute for in-depth study of the whole picture. Analysts views must not substitute for critical thinking.