Quarterly Update
By Chris Cassidy, CEO
When I started my freshman year of college, I opened an Ameritrade Account. I had worked hard all summer and had accumulated enough savings to start investing. My major problem was that I knew next to nothing about investing at the time.
I began my college career planning to double major in English and Political Science.Although I enjoyed reading Geoffrey Chaucer and Alexander Hamilton, they offered me very little in the way of investing advice. I naively assumed that I could skim through an investment book in the library and instantly become a stock market guru, so I picked up a copy of Peter Lynch’s Beating the Street. In that book, Lynch’s Principle #14 was “if you like the store, chances are you’ll love the stock.” Lynch noted that he would drive to his local mall and see what stores and products consumers were gravitating towards.
That concept sounded very simple to me, and I decided to observe the student body and purchase stocks based on their behavior. Most students in those days had large clunky Dell desktops in their dorm rooms powered by Intel processors. Also, many students were starting to purchase a relatively new device known as a cellular telephone, and Nokia was a popular brand (these were the days before iPhones). In addition, I noticed a lot of empty Bud Light cans on campus when I would go to the gym on Saturday mornings. Consequently, I decided that I could simply buy a three-stock portfolio of Intel, Nokia, and Anheuser-Busch.
Unfortunately for me, all three stocks under-performed the broader market. Fortunately for me, I began taking finance, accounting and investment classes and learned about valuation techniques, security analysis and diversification. As I applied these concepts to my own portfolio, the performance greatly improved.
When we hire portfolio managers we seek individuals that understand fiduciary investment management and the importance of diversification. We also seek individuals that care deeply about their local communities and enjoy being part of a locally-controlled, employee-owned company. This past year, we were fortunate enough to hire Ian Estabrooks to be a portfolio manager for the Rutland and Manchester regions. Ian has 15 years of investment experience and a Chartered Financial Analyst (CFA) designation.
Ian is a native Vermonter and currently resides in East Dorset with his wife Alicja and their two children. Ian has written an article for us this month on the benefits of diversification. Fortunately for his clients, he understands that a three-stock portfolio is not a prudent investment strategy.