Investor and trader since 1982. Semi-Retired Broadcasting Engineer. Investing in income and growth stocks in IRA, using options for hedging during corrections. Trade more actively and speculatively in non IRA account.
My primary investment methodology involves screening for micro-cap/small companies with both a solid balance sheet and an attractive valuation, then researching for internal or external catalysts that will likely have a positive influence on future earnings or facilitate a successful 'turn-around'. Internal catalysts would include replacement of a CEO (often a founder), an innovative new product, or a complementary acquisition. An external catalyst would take the form of an underappreciated yet robust positive change or trend in the company's business environment. Look especially for a confluence of positive factors. A degree of inferential reasoning is required, I believe, for judging the potential value of a given catalyst in the context of each individual company's circumstance. My conservative risk/reward criteria for stock selection--seeking the combination of substantial upside potential with minimum downside risk--can well be described by the phrase 'heads I win, tails I don't stand to lose much.' Satisfied to hold cash until I find the uncommon opportunity of strong earnings growth potential in combination with low stock valuation. Must be a compelling enough opportunity to justify accumulating a meaningful position. Invest with an expected minimum hold period of two years and a projected hold of 3-5+ years. Target capital gains potential of 20-25% compounded annually in exchange for the risk of investing in small companies. Current micro-cap holdings: TAYD, DRAD, SPAR, KTEC, HSON.
Secondarily, I'm just beginning to build a bond-equivalent portfolio of large-cap dividend stocks. Quite a challenging process, in my view, given that the growing popularity of DGI--in a predictable consequence of ZIRP--has driven up valuations excessively for the most sought-after names. Future 'flash crash' days or periods of market capitulation will likely provide the best opportunities.
My academic background is in Engineering and management.
Besides one basic accounting course at university my investment knowledge is self-taught.
Reading books, SEC filings, annual reports, analyst reports, blog posts, MOOCs, message boards and listening to select podcasts and conference calls has helped me enormously to evolve as an investor.
After graduating cum laude with a BA in economics from Harvard, I worked in hedge funds and investment banking for ~6 years before leaving to manage my own money full time. I am a CFA charterholder and focus mostly on microcaps / event-oriented trades as that is where I think the market tends to be least efficient. I also started a website to track interesting arbitrage opportunities for individual investors (link below) - check it out!