Our Investment Philosophy
“Our investment philosophy can be summed up in five words, counted on one hand: the beauty of dividend growth.”
Human beings invest for one reason: income. Cash back in your pocket to buy the things you need and want. Simple but true. Yes, the time horizon changes: You might want your invested money back in five years, or 10, or 30, or never — because it might be for your grandkids. But the core purpose remains: income. Human beings invest for income.
Around here we are goal-focused, plan-driven, long-term equity investors. We don’t try to time the market (because it’s literally impossible), we don’t day trade (because we’re investors not gamblers), and we don’t prognosticate (because no one knows the future).
Instead, we stick with timeless wisdom: We buy shares of businesses that we want to own — and we’re partial to the kinds of businesses that actually return cash to shareholders in the form of dividends — and we own those businesses as long as they adhere to sound philosophical and financial practices.
Of the many beautiful things about dividends, here are two truths for two kinds of investors:
For accumulators (those still accumulating wealth to live on later): Reinvested dividends are a magical-yet-real additional compounding function. Our beloved dividend growing companies pay us our dividends and we immediately use those dividends to buy more shares.
For distributors (those distributing portions of their wealth to live on now): Dividends are the reward for patiently enduring the ups and downs of stock prices — for having faith in humanity. We can distribute the dividends to our checking accounts without even selling our shares.
Investments aren’t everything we do with you, but they’re a central piece of any rational plan to grow, protect, and pass on wealth. Plus, you can learn a lot about your actual or potential financial advisor by asking about his or her investment philosophy.
At Freedom Quest, we seek first principles for human flourishing in everything we do, and investments are no different. Beyond the introductory discussion on this webpage, we teach our approach to investing on our Investment Philosophy statement. Currently it has 45 theses. Clients receive a full education on the theses, and you can read excerpts below.
Just remember: one’s investment philosophy is inseparable from, and consequent on, one’s broader view of everything else, e.g. human nature & human flourishing, divine matters, moral truths, freedom, virtue, the purpose of business — which explains some of the items on the statement that are not traditionally thought of as related to “money.”
Selections from Our Investment Philosophy: 45 Theses
#1. Wealth is freedom, of a certain kind.
#2. Money is purchasing power.
#3. The purpose of investing is to increase purchasing power.
#6. Money is about desire. Desire is about the most important things. Ergo: Money tells us what we love.
#7. Inflation is the enemy of money.
#8. There are two kinds of capital: Capital that is outpacing inflation and capital that is being outpaced by inflation.
#10. We aim to build true wealth, i.e., the first kind of capital, by being owners of businesses, not loaners to businesses..
#18. We do not invest in the “stock market.” (No one does.) We invest in businesses that we want to own.
#19. Business is inherently beautiful, being the free, uncoerced exchange of goods from one human to another.
#24. Dividends from The Great Companies are not a serendipitously superfluous benefit in investing. They are the Benefit.
#28. Equity investing makes one great demand of the human investor: faith in humanity. Its reward is wealth.
#30. The greatest investment “risk” is failing to achieve our goals.
#34. We invest based on our household goals and according to a rational plan. We do not invest out of fear.
#38. It is not the White House’s job to steward my household’s money. It is my job: My financial freedom is up to me.
#39. The White House’s job is to secure my natural and civic rights. (The Declaration of Independence)
#40. As goes a nation’s individual households, so goes the nation as household.
#41. The best defense of American liberty is the liberty of the American household.
#42. “Only a virtuous people are capable of freedom. As nations become more corrupt and vicious, they have more need of masters.” (Benjamin Franklin)
#44. Pessimists sound smart. Optimists make money.
#45. All good long term financial decisions come from love.
Second Opinion & A Cup of Coffee
Wondering if your portfolio matches your goals? By appointment, you're welcome to come in and sit with me for a while. I'll ask you to briefly outline your financial goals — what your investment portfolio is intended to do for you. Then we'll review the portfolio for and with you.
If I think your investments continue to be well suited to your long term goals, I'll gladly tell you so, and send you on your way.
If, on the other hand, I think some of your investments no longer fit with your goals, I'll explain why, in plain English. And, if you like, I'll recommend some alternatives.
Either way, the coffee's on me. When you schedule, tell me how you take it.