Minutes
Monthly Meeting,
President Bob Welge brought the
meeting to order at
Bob next announced the schedule of future chapter
meetings. The next meeting will be on
May 9th, when Paul Rabbitt will discuss A
Hybrid Approach: ETF Hedging and Stocks.
Following Paul will be a Roundtable on Picking Winning Stocks Using
Web-based Screens and Leading Screening Criteria. The Roundtable will be
held at Bob’s office, in the 2nd Floor Conference Room of the
Bob then introduced today’s speaker, Wade Slome, President and Founder of Sidoxia Capital Management – an investment management firm for investors with moderately-sized portfolios – and his presentation Beating the Market – Investing in Volatile Times. Wade is a CFA and CFP, has an MBA from Cornell, and is author of How I Managed $20,000,000,000.00 by Age 32 (as a portfolio manager at American Century Investments) – all credentials that he put to work admirably in his presentation.
For anyone seeking a better understanding about the unprecedented market volatility over the past year, Wade provided, first, a clear and incisive picture of how it came about, and second, he offered his views of how to invest in it going forward.
How’d we get here. Over the
last 30 years, interest rates trended ever downward, stimulating ever-looser
lending that finally culminated in ‘putting lipstick on the mortgage pig,’ with
the unavoidable and painful consequence of forcing the nation to go on a
financial diet. The mortgage lipstick took the form of Credit Default Swaps (CDSs), characterized by Warren Buffett
as “$500 trillion Weapons of Mass Destruction.”
What to do in response? – “You can always count on
Investor pitfalls. (1) Paying fees that are too high (compared to a Vanguard fund with a 0.07% fee, say). (2) Chasing performance – a tendency to follow the herd as it’s being led to the slaughterhouse.
Winning tools. (1) Buy fear, sell greed. (2) Invest in products that have low fees, diversification, tax efficiency, and a long time horizon to take advantage of the power of compounding.
Stock analysis – combine Art and Science. Use screens to identify stocks with attractive sales, return on invested capital (ROIC), margins, earnings, debt/capital ratio, free cash flow – and that are self funding and are a leader in their industry. Look for stocks beginning a long runway of growth – examples are Google and Teva. Identify long term, major trends: Tech, Water, Green, Inflation, Aging Demographics, Globalization, and Mergers and Acquisitions (M&A).
Wade espouses a long-term investing strategy of 3-5 years; it requires him to trade only once a week, on Mondays. When appropriate (high VIX, volatility), he will make lemons from lemonade by shorting and writing options with 3-5 month duration.
For those with questions or seeking further information, Wade can be reached at www.Sidoxia.com or 949-258-4322.
Following the conclusion of Wade’s
talk, Bob adjourned the meeting at
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Recorded By Ed Sharman