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From the Desk of Jim Stack...
Over the years, at least four doctrines have influenced and created my personal investment philosophy. These carry a heavy weight in all my investment decisions:
1) My indoctrination into the stock market, or "baptism by fire" as I remember it. It came during 1973-74 as I watched my own portfolio lose over -50%, the Nasdaq Index lose -60%, and even the stock of my bluest-of-blue chip employer (IBM) drop -58%. I also remember the despair as retirees were forced to cancel or reverse their retirement plans simply because their portfolios had lost too much. I have unending respect for those little "blips" on historical wall charts. They represent real bear markets, with big losses. And believe me, they're a lot tougher to recoup than the stories portrayed by mutual funds and the media.
2) An education and professional background based on logic and reason. With an engineering degree and experience as a Project Manager with IBM Research, my approach to the markets could only be analytical, rather than emotional. That can be a valuable asset in an aging bull market fueled by greed and emotion... or in a bear market seized by panic.
3) Historical knowledge that is founded on years of research. I know from research that the "correct" decisions on Wall Street invariably require you to move against the crowd... and at times, against every emotional fiber in your body. It was this historical tempering that permitted InvesTech to identify the start of the huge 1991-2000 bull market (our issue titled "TORO! TORO!" was published on January 4, 1991), and propelled us to advise subscribers in March 2009, just 4 days after the bear market bottom, that they were "heading toward a buying opportunity of a lifetime." Conversely, it is that same tempering that forced us to step aside early, and avoid the Wall Street bubble as it popped in March 2000... devastating the average investor.
4) Our consideration and respect for our subscribers and managed account clients. Surveys show the median age of our subscriber base is 57 years. That means most are in, or within a dozen years of, retirement. It's not enough to ride a major bear down with 45% losses, and feel "good" because market indexes lost 50% or more. In that respect, we are not part of the Wall Street crowd or consensus.
Our goal is not merely to maximize return, but to maximize risk-adjusted-return... or provide the best possible gains for the amount of market risk taken. Our long-term track record, especially during the 1987 Crash, and 2000-02 and 2007-09 Bear Markets, has proven an ability to do just that.
In our ongoing commitment to our subscribers, the staff at InvesTech Research is consistently looking for new tools and models to measure risk and determine when to be an aggressive investor in the stock market. We will always try to improve our investment returns. However, you will never see us sacrifice our objective, safety-first strategy for the sake of a quick profit or the comfort of merely being a part of the crowd.
James B. Stack