Successful Long-Term Investing: The Journey The Journey October 15, 2011 Presented by: Mark Robertson Founder & Managing Partner, Manifest Investing [email protected]

Successful Long-Term Investing:Successful Long-Term Investing: The JourneyThe Journey

October 15, 2011

Presented by:

Mark RobertsonFounder & Managing Partner, Manifest Investing

[email protected]

Successful Long-Term Investing: The JourneySuccessful Long-Term Investing: The Journey

No investment recommendation is intended.

This is an educational demonstration.

The information in this presentation is for educational purposes only and is not intended to be a recommendation to purchase or sell any of the

stocks, mutual funds, or other securities that may be referenced. The securities of companies referenced or featured are for illustrative

purposes only and are not to be considered endorsed or recommended for purchase or sale by Manifest Investing or AAII or NAIC/BI. The

views expressed are those of the instructors, commentators, guests and participants. Investors should conduct their own review and analysis of any company or fund of interest before making an investment decision.

Securities discussed may be held by the instructors in their own personal portfolios or in those of their clients.

Successful Long-Term Investing:Successful Long-Term Investing: The JourneyThe Journey

What are the most powerful lessons learned from multiple

decades of successful long-term investing? Join us as we explore best practices and examine the key success factors based on

working with the most successful investment clubs and individual

investors.

Successful Long-Term Investing:Successful Long-Term Investing: The JourneyThe JourneyMost important factors for Most important factors for

selecting long-term investments selecting long-term investments

Most important components of Most important components of fundamental analysis fundamental analysis

Key aspects of momentum and Key aspects of momentum and sentiment: technical analysissentiment: technical analysis


5


6


Rappahannock (2008-Current)

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%R

ate

of

Ret

urn

(IR

R)

Club

S&P 500 Overall annualized

relative return is (+5.4%)

1-Year relative return is +14.4%


8




11


1. Commit. (Invest regularly) Study opportunities carefully.

2. Buy high-quality companies when they’re on sale and Hold ... As long as it makes sense to

do so.

3. Prudently diversify by size & sector and allocate.

Be a diligent owner.

Experienced investors should be willing to explore deep-

value opportunities and engage capital preservation

strategies.


Growth: Diversify by Small, Medium & Large

Lost Decade

13


14

Be patient. Be disciplined. Imagine.




Do Moats (Quality) Matter?


18


19

Average = -19%


Establishing Expectations

20

ForecastsForecasts

1. Growth1. Growth

2. Profitability2. Profitability

3. Valuation3. Valuation


21


Big PictureBig PictureTurbulence, Temporary or Terminal?Turbulence, Temporary or Terminal?

Thoughts, Actions?Thoughts, Actions?


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Gauging Momentum: Relative Strength Index (RSI)

RSI is based on closing prices

www.StockCharts.com


Few Moments with Desmond & Elder: Sentiment

http://www.ritholtz.com/blog/2011/02/qa-paul-desmond-of-lowrys-part-ii/


Changing of the Colors: Advent of a Bear Market?


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Where are we “now?” Potential tipping point?


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Selling a stock is not un-American. Don’t hold because you’re stubborn

and don’t let the tax tail wag the decision dog, either. Take advantage of selling opportunities when you have

a good reason.

1. You need the money. This one is personal. Your own life circumstances

(college, a vacation, new car, new house, doctor bills, child’s wedding, bail money, church offering plate)

dictate the need. Update your company studies and sell the one that makes the most sense, often the one with

the lowest expected return. Source: “When to Sell: The Challenge of Reason” – Better Investing

(September 2004)


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2. Because fundamentals (quality) are in decline.

Watch changes in management, slowing growth rates, declining profit margins, weird footnotes... and the FBI

and SEC. 3. Because you can make the portfolio

Better!Better!Improve the expected returns. Maintain the quality of the

holdings. Keep the overall sales growth forecast (or dividend yield) strong enough. Prudently diversify.

Don’t be afraid to sell. Portfolios CAN be

improved!


1. We’re here for the returns. Build an understanding of and expectations for your

companies.

2. Quality matters. Excellent companies persist and provide protection during bear

markets and corrections.

3. Design and manage portfolios with an emphasis on return forecasts, overall quality and the average growth of the

holdings. Rinse. Repeat.

Build an awareness of the tidal powers of momentum and sentiment. Discover

discipline and practice patience.









0%

5%

10%

15%

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

20-year trailing average of ~3% ... Larger sample at 5.3%

Trends/Forecasting …


-15%

-10%

-5%

0%

5%

10%

15%

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

Housing Price Index (Warren/Troy/Farmington Hills) …

20-year trailing average of ~3% ... Larger sample at 5.3%



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Successful Long-Term Investing: The Journey The Journey October 15, 2011 Presented by: Mark Robertson Founder & Managing Partner, Manifest Investing [email protected]