Wednesday, May 30, 2012

We must get back to real investing


Back in February of 2009, in the very depths of the financial panic of 2008 - 2009, we published a post called "Managing Investments in the New Era" which discussed a video (above) of a talk that Gerry Frigon gave on January 26, 2009.  It was a very dark time -- the market would reach bottom less than a month later, on March 9 of the same year. The theme of the talk was the factors that had led up to the catastrophe on Wall Street, and what investors should focus on to move forward.  

Those two subjects are related.  We argued that the over-reliance by investment professionals on math-based systems advocated by "modern portfolio theory" had played a major role in setting the stage for the panic, and that the lesson for investors going forward should be on what we called "getting back to real investing," including a focus on businesses rather than on markets.  If you don't have time to enjoy the full 39 minute video above, at least forward to the 22-minute mark which gets down to what we mean by "real investing."

It's been over three years now since that video was published, and we would like to point out that our experience since that time has borne out the assertions that we made back then.  We said that we believed there were tremendous opportunities for investors who focused on companies providing real innovation, and we have highlighted some of those companies on this blog in the years since then (see for instance here and here).  A look at the performance of our client accounts managed in the Taylor Frigon Core Growth Strategy since that time is available here.

We continue to believe that the convictions articulated in that talk from January 2009 are as true today as they were then, and that re-watching that video can be very beneficial for investors going forward from this point as well. 

One other example of a tremendously innovative company was highlighted today at the "All Things D" D10 conference in Rancho Palos Verdes, California, discussed in this article entitled "OTOY takes movie production to the cloud".  Note at the bottom of that article that Taylor Frigon is listed as an investor in Otoy (which is a private company), alongside technology and innovation prophet George Gilder.