Investment Philosophy

by Kenneth J. Gerbino

 

 

My investment philosophy is very simple. You have to roll with the economic punches and be very careful of the playing field because the economic policies that have been in place for the last few decades have created a very unstable investment environment.

 

These trends and events have made an investment climate that deserves caution. I encourage you to read the many past commentaries available on this website to gain an understanding of this problem.

 

On specific investments such as stock and bond selections, I believe in the following: Diversification, using conservative parameters for evaluations, and paying attention to company and economic statistics. I like to see both growth and value in an investments future.

 

I have learned the hard way that being patient, not overpaying for an investment and admitting mistakes early are very good guidelines. The real work is looking for solid companies and low risk debt instruments. On stock selections one must always stay with winning managements, winning companies, and winning industries with real fundamental values.

 

As far as today’s investment environment, there should be no doubt about future financial trends.  The basic fundamentals are simple:

 

• Excessive budget deficits
• A weak dollar
• Trade deficits approaching $1 trillion annually
• Artificial low interest rates
• An expensive war on terrorism

 

These are all going to create investment problems and opportunities in the future. Many of the above factors reinforce and cause some of the other factors to exist.

 

The U.S. economy is slowly moving along, but this is due to the artificial low interest rate environment created by the Federal Reserve Bank to keep the economy and the banking system afloat.

 

Low interest rates caused by decades of monetary injections in the U.S. may still move the economy along and help corporate profits for a few more years…. but this has been an artificial stimulant….and the hangover will be much higher interest rates and  inflation.

 

The solution is to be conservative with your money. Even with a lot of horrible events taking place on the economic front, the world still turns, people still have to get up in the morning and eat breakfast.

 

So don’t worry about the economy falling apart — it will slow down, but keep going. But be very careful of where you invest your money. The name of the game now is to intelligently invest but keep a high priority on wealth preservation.

 

Kenneth J. Gerbino

 

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Read more information from Ken in his commentaries on investing and the economy:

 

​Financial Commentaries