THE TURTLE USUALLY WINS THE RACE | CROUCH CONNECTION, September 2017

THE TURTLE USUALLY WINS THE RACE

Every few years, our industry has a debate regarding the relative value of using a growth-oriented investment strategy or a value-oriented strategy. Depending on the year, at times the growth strategy looks to be the best strategy and sometimes the value strategy wins. This year, in our opinion the growth guys and girls are clearly winning the debate as growth managers have out-paced the value group by several percentage points.

Over the years, the famous investors have almost always been value managers. Warren Buffet and his value-oriented friends have become wealthy because they have not only made positive returns in good markets but they have managed to avoid disasters when the inevitable correction comes.

Jeff Saut, Raymond James Chief Market Strategist, quoted Oaktree Capitol’s Howard Marks in his daily missive on Thursday, September 14:

If you refuse to fall into line in carefree markets like today's, it's likely that, for a while, you'll (a) lag in terms of return and (b) look like an old fogey. But neither of those is much of a price to pay if it means keeping your head (and capital) when others eventually lose theirs. In my experience, times of laxness have always been followed eventually by corrections in which penalties are imposed. It may not happen this time, but I'll take that risk. In the meantime, Oaktree and its people will continue to apply the standards that have served us so well over the last [thirty] years.

As one who clearly believes that the value strategy is one of the safest paths to long-term rewards, I continue to follow the turtle’s path when it comes to investing. At the risk of appearing to be an old fogey, I believe the best strategy is to buy high-quality companies at reasonable prices and hold them as long as their businesses continue to deliver promising returns.

TWEAKING THE PORTFOLIO

Having said that, you may have noticed that the activity in our accounts has increased in recent weeks. Even though some of the companies that have experienced weakness this year have solid long-term prospects, we have concluded that their short-term results may continue to be problematic.

As we continue to survey the markets for promising companies at reasonable prices, there are several names that surface as better prospects for the near-term markets. I believe most of my clients expect me to make a change if we discover an investment with more promising prospects.

FACTSET RESEARCH SYSTEMS

This year we received access to a vastly expanded treasure trove of financial data and analytical applications. FactSet Research Systems provides financial information and analytical applications to investment professionals around the world, and thanks to an agreement reached this spring between FactSet and Raymond James, we received access this amazing database in late June.

With FactSet analytics, we can now access up to 30 years of financial information on any public company traded on the major exchanges in a matter of moments as well as data on all of the important economic reports that make the news. Data that we had accessed from several different sources in the past is now not only available from one source, but can be simultaneously compared with historical data through the graphic analytics available on FactSet.

A significant benefit that I have discovered is the ability to track the projections of most of the research analysts in the industry on any company I want to evaluate. Although I am not confident following the buy/sell recommendations of any analyst, I do believe analysts provide valuable estimates of the future expected earning on the companies they follow.

We can now track daily the effects of any news on the earnings estimates of the companies we follow, which in many cases is the most important information you could have. What this means is we can now make effective use of the research community and reach well-researched decisions much more quickly than in the past.

This will allow us to confidently add more positions in more different industries to our portfolios, providing more diversification. An exception to the above will be accounts under $50,000 which will still be subject to a transaction fee when we trade positions, which we always try to minimize.

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”

• Warren Buffett

WRAP UP

Please give us a call if you have any specific questions about your portfolios. We always enjoy calls from our clients!

Sincerely,

Dave Crouch

Financial Advisor

Registered Principal

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Aspen Grove Asset Management is not a registered broker/dealer, and is independent of Raymond James Financial Services. Investment Advisory Services are offered through Raymond James Financial Services Advisors, Inc. Opinions expressed are not necessarily those of Raymond James Financial Advisors. Information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. Past performance may not be indicative of future results.