Investors & Friends:
I'm back from my hiatus, and it's good to be back! Let me be clear. I've been investing, but I haven't had enough time to work on the Investrio Stock Selector Fund Bull and Bear Market Indicators weekly report. The lack of time was a result of my being promoted at work. I needed extra time to get a handle on my new responsibilities. Now the transition is over, and I can get back to growing Investrio.
I wish I had been able to keep up with the weekly report. However, sometimes a perceived setback is really an opportunity in disguise. We were long overdue for a pause. We needed a chance to stop and take a fresh look at what we've been doing and what we want to do next. The approach of a new year reminds us that now is an ideal time to start planning for 2014.
For those who don't know what Investrio is, let me explain briefly how we got started. Investing began as a hobby in 1993. I started with a few dollars and a few stocks. Over time I began to think of investing as more of a business than a hobby. In 2007, I named the business Investrio. I attended a INVESTools seminar with two friends. (The seminar was led by the Thinkorswim Group, which was acquired by TD Ameritrade in 2009.) After the seminar we discussed investing over breakfast at the Summit Diner in Summit, NJ. We discussed forming an investment group, and since there were three of us, the "investing trio," the name Investrio was a simple and obvious choice. No further thought required.
One day the light bulb went off, and I realized that my personality and my career as an IT professional matched up very well with what's required to be a skilled investor: disciplined (sticking to a strategy and changing it rarely), value-oriented (seeking high quality at a sale price), quality-oriented (seeking companies with a near-zero chance of going bankrupt), and contrary (being fearful when Mr. Market is greedy and greedy when Mr. Market is fearful. I learned this from Warren Buffett, and I think it's one of the most important principles of successful investing.)
Ted Mertyris
Lead Fund Manager
I'm back from my hiatus, and it's good to be back! Let me be clear. I've been investing, but I haven't had enough time to work on the Investrio Stock Selector Fund Bull and Bear Market Indicators weekly report. The lack of time was a result of my being promoted at work. I needed extra time to get a handle on my new responsibilities. Now the transition is over, and I can get back to growing Investrio.
I wish I had been able to keep up with the weekly report. However, sometimes a perceived setback is really an opportunity in disguise. We were long overdue for a pause. We needed a chance to stop and take a fresh look at what we've been doing and what we want to do next. The approach of a new year reminds us that now is an ideal time to start planning for 2014.
For those who don't know what Investrio is, let me explain briefly how we got started. Investing began as a hobby in 1993. I started with a few dollars and a few stocks. Over time I began to think of investing as more of a business than a hobby. In 2007, I named the business Investrio. I attended a INVESTools seminar with two friends. (The seminar was led by the Thinkorswim Group, which was acquired by TD Ameritrade in 2009.) After the seminar we discussed investing over breakfast at the Summit Diner in Summit, NJ. We discussed forming an investment group, and since there were three of us, the "investing trio," the name Investrio was a simple and obvious choice. No further thought required.
One day the light bulb went off, and I realized that my personality and my career as an IT professional matched up very well with what's required to be a skilled investor: disciplined (sticking to a strategy and changing it rarely), value-oriented (seeking high quality at a sale price), quality-oriented (seeking companies with a near-zero chance of going bankrupt), and contrary (being fearful when Mr. Market is greedy and greedy when Mr. Market is fearful. I learned this from Warren Buffett, and I think it's one of the most important principles of successful investing.)
In 2007, I got into the habit of creating a weekly report, which I called Investrio Stock Selector Fund Bull and Bear Market Indicators. Some of the building blocks of the report came from Stan Weinstein's book, which I think provides a great introduction to investing and trading. The weekly report helped me get into the habit of collecting data and trying to make sense of it. The weekend was the perfect time, because it was free from the daily noise and fluctuations of the market. Some people asked me if they could read it. I was happy to share it, and in doing so, I discovered that I had a passion for teaching and exchanging investment ideas with others.
I also created a simple web-log (blog) called the Trading Desk at www.Investrio.blogspot.com. It summarizes our buy/sell actions and links to Investrio Stock Selector Fund Bull and Bear Market Indicators.
In 2009, I got my first customer who wanted us to manage an equity portfolio for them. Today we have three customers. It's a start.
Our investment strategy is simple and straightforward. It seeks to generate income through dividends and options, and to grow capital modestly through share price appreciation. In addition to holding equities long or short, my preferred investment type is writing options, both call options and put options. We diversify our option positions across industries and expiring across different calendar months. This reduces risk in the event we're assigned. We write put options against companies that have a wide moat, i.e., a durable competitive advantage relative to its industry peers and a near-zero chance of bankruptcy. If we’re assigned, we're happy to own a piece of a wide moat company.
Wide economic moat is a term popularized by Warren Buffett. It refers to a company's ability to maintain a competitive advantage. To screen for companies with a wide moat, we look for companies that have averaged 10% or higher over the most recent 10-year period in five key ratios: Return on Invested Capital (ROIC), Book Value/Share Growth Rate, Earnings per Share (EPS) Growth Rate, Sales Growth Rate, and Free Cash Flow Growth Rate. Finding companies that have all five ratios at 10% or more for 10 years can be like searching for the Holy Grail. However, there are companies that can sustain a superior level of performance year in and year out. We can also loosen things up and look at companies that meet most of the ratios but not all.
As I stated previously, as we approach a new year, now is an ideal time to start planning for 2014. One goal is take a fresh look at the weekly report. What components of the report help us fortify the portfolio, identify entry/exit points, and detect bubbles before they burst? What components should we add or phase out? Another goal is increase staff and analysis capacity. (We should seek staff that is: intellectually curious, flexible and open to new information, able to recognize problems and define them clearly and accurately, able to put information together in many different ways to reach a solution, unorthodox, mentally restless and highly motivated, and goal-oriented.) Another goal is expand beyond equity and equity options. Another goal is seek new accounts in 2014. Currently we have customer assets under management (AUM) of 670,000 dollars. In 2014, our goal is to increase customer AUM by about 50 percent, or 330,000 dollars, crossing the million dollar threshold.
Thank you for investing your time in reviewing this. I would be happy to answer any questions you may have.
I also created a simple web-log (blog) called the Trading Desk at www.Investrio.blogspot.com. It summarizes our buy/sell actions and links to Investrio Stock Selector Fund Bull and Bear Market Indicators.
In 2009, I got my first customer who wanted us to manage an equity portfolio for them. Today we have three customers. It's a start.
Our investment strategy is simple and straightforward. It seeks to generate income through dividends and options, and to grow capital modestly through share price appreciation. In addition to holding equities long or short, my preferred investment type is writing options, both call options and put options. We diversify our option positions across industries and expiring across different calendar months. This reduces risk in the event we're assigned. We write put options against companies that have a wide moat, i.e., a durable competitive advantage relative to its industry peers and a near-zero chance of bankruptcy. If we’re assigned, we're happy to own a piece of a wide moat company.
Wide economic moat is a term popularized by Warren Buffett. It refers to a company's ability to maintain a competitive advantage. To screen for companies with a wide moat, we look for companies that have averaged 10% or higher over the most recent 10-year period in five key ratios: Return on Invested Capital (ROIC), Book Value/Share Growth Rate, Earnings per Share (EPS) Growth Rate, Sales Growth Rate, and Free Cash Flow Growth Rate. Finding companies that have all five ratios at 10% or more for 10 years can be like searching for the Holy Grail. However, there are companies that can sustain a superior level of performance year in and year out. We can also loosen things up and look at companies that meet most of the ratios but not all.
As I stated previously, as we approach a new year, now is an ideal time to start planning for 2014. One goal is take a fresh look at the weekly report. What components of the report help us fortify the portfolio, identify entry/exit points, and detect bubbles before they burst? What components should we add or phase out? Another goal is increase staff and analysis capacity. (We should seek staff that is: intellectually curious, flexible and open to new information, able to recognize problems and define them clearly and accurately, able to put information together in many different ways to reach a solution, unorthodox, mentally restless and highly motivated, and goal-oriented.) Another goal is expand beyond equity and equity options. Another goal is seek new accounts in 2014. Currently we have customer assets under management (AUM) of 670,000 dollars. In 2014, our goal is to increase customer AUM by about 50 percent, or 330,000 dollars, crossing the million dollar threshold.
Thank you for investing your time in reviewing this. I would be happy to answer any questions you may have.
Ted Mertyris
Lead Fund Manager
Investrio
