Los Angeles, CA-based value asset manager FPA has just issued FPA Crescent Fund manager Steve Romick's "Speech to CFA Society of Chicago."
The wide-ranging speech touches on the development of the Crescent Team's investing approach and mentality, its focus on market cycles, and the irrelevance of macro predictions, though he does note that "low rates...continue to pervert capital allocation decisions (pg. 11)."
Mr. Romick also looks closely at a few stocks and sectors, providing insight on why he invested in or steered clear of them. He concludes with his general investing philosophy:
"I learned long ago to accept that in the pursuit of return, I will lose money. So I won’t be surprised when it happens. I hope that we’ll be right more than we’ll be wrong and that the winners will more than offset the losers, as has been the case in the past.
Knowing there will be surprises takes the emotional sting out of them when they occur, allowing for a more clinical approach to investing. It keeps us from getting scared out of investments, as much as it keeps us from getting scared into them.
Our long view and willingness to diverge from the crowd isn’t always the easy path as it may put us at odds with our peers and, more importantly, our investors. But it is our path. It is up to you to find yours. One should not be surprised by the actions of others. You can’t control broad investor behavior but you can control yours.
Have conviction but be flexible. Rigidity can lead to unpleasant surprises. Things can come out of the blue but if it’s a pigeon letting loose on your shoulder, just wipe it off and keep moving forward."
To read the piece in its entirety, please click here.
