To the best of my ability, I try to provide the timely disclosure of my investment activity. In my April 3 Blackstone and Brookfield Exposure Increase post, I disclose purchases in those two companies. With the April 7 Mastercard (MA), S&P Global (SPGI), and HEICO Corporation (HEI and HEI.a) exposure increases, I now disclose these recent purchases.
The current market conditions reinforce the importance of investing in great companies with the potential to generate attractive long-term total investment returns. This is because share prices are susceptible to wide short-term fluctuations. The underlying businesses, however, generally do not materially change overnight.
The disclaimer at the end of every post states:
I do not know your circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your research and due diligence.
I consider myself to be a relatively prudent investor. When I claim to be a prudent investor, I mean that I limit my investments to companies that are likely to weather 'major financial storms'. Although my investments may plummet in value in the short-term, I limit my investments to companies where the permanent impairment to my capital is remote.
This relatively cautious approach to investing carries over to my investment recommendations for a couple of young investors in their late 20s/early 30s whom I am helping on their journey to financial freedom.
The Psychology Of Money
In his Psychology of Money bestseller, Morgan Housel explains that growth fuels more growth. It is not what you start with but rather how long you are doing it.
Housel provides the following example to demonstrate the power of compounding:
I have heard many people say the first time they saw a compound interest table—or one of those stories about how much more you’d have for retirement if you began saving in your 20s versus your 30s—changed their life. But it probably didn’t. What it likely did was surprise them, because the results intuitively didn’t seem right. Linear thinking is so much more intuitive than exponential thinking. If I ask you to calculate 8+8+8+8+8+8+8+8+8 in your head, you can do it in a few seconds (it’s 72). If I ask you to calculate 8×8×8×8×8×8×8×8×8, your head will explode (it’s 134,217,728).
Many investors, however, overlook the impact of time on their investments.
It is critical that investors have a long-term mindset. An equity investment in a company means we become a 'part owner'. Business owners typically do not have the mindset of actively buying/selling their business. While business owners can certainly not disregard the short- and mid-term, they typically have a long-term vision for their company.
Many retail investors (myself included) have neither the desire nor the aptitude to be successful business owners. When we invest in businesses, we count on senior management doing what is appropriate to navigate various business conditions.
We are currently experiencing unforeseen factors that can 'knock the wind out a company's sails'. Anybody who has been on the high seas during 'less than ideal' conditions has likely experienced seasickness as the ship is tossed around by the waves and wind. The seaworthiness of a ship and the expertise of the ship's crew has a significant bearing on whether the ship will be able to navigate its way to 'calmer waters'.
This is much the same as what we are experiencing in the global equity markets hence the reason why I limit my exposure to companies that have a very strong probability of being able to navigate their way too 'safer conditions'.
Final Thoughts
Depending on your circumstances, this may be an opportune time to acquire shares in great companies.
All 5 companies in which I have just recently increased exposure should be able to weather the current turbulent market conditions. It is entirely possible, however, they may be bruised in the 'short-term' and may need to lower their outlook/guidance. Are they, however, likely to fail? Probably not.
On April 7, I acquired the following:
- Mastercard (MA) @ $482.7771
- S&P Global (SPGI) @ $446.78
- HEICO Corporation (HEI.a) @ $190.3351
All were top 20 holdings when I completed my 2024 year-end portfolio review; MA was my 2nd largest holding, HEI.a was my 9th largest holding, and SPGI was my 17th largest holding. In early March, however, I acquired an additional 200 SPGI shares in a 'Side' account within the FFJ Portfolio so this holding has likely moved up in rankings.
NOTE: I do not disclose the number of shares acquired on April 7 because the purchases were made through accounts for young investors for which I do not disclose details.
I wish you much success on your journey to financial freedom!
Note: Please send any feedback, corrections, or questions to [email protected].
Disclosure: I am long MA, SPGI, and HEI.a.
Disclaimer: I do not know your circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your research and due diligence. Consult your financial advisor about your specific situation.
I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with any company mentioned in this article.
