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Successful Long-Term Investing:

The Journey
October 15, 2011

Presented by:

Mark Robertson
Founder & Managing Partner, Manifest Investing
markr@manifestinvesting.com

Successful 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:
What are the
most powerful
The Journey
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:


Most important
factors for
The Journey
selecting long-term investments
Most important components of
fundamental analysis
Key aspects of momentum and
sentiment: technical analysis

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Rappahannock (2008-Current)

Overall
annualized
relative return is
(+5.4%)

1-Year relative return is +14.4%

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

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Successful Long-Term Investing: The Journey


1. Commit. (Invest regularly)
Study opportunities carefully.
2. Buy high-quality companies
when theyre 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 deepvalue opportunities and
engage capital preservation
strategies.

Successful Long-Term Investing: The Journey

Growth: Diversify by Small, Medium &


Large

Lost
Decade
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Successful Long-Term Investing: The Journey

Be patient. Be disciplined.
Imagine.

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Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Do Moats (Quality)

Successful Long-Term Investing: The Journey

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Successful Long-Term Investing: The Journey

Average = -19%

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Successful Long-Term Investing: The Journey

Establishing Expectations

Forecasts
1. Growth
2. Profitability
3. Valuation
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Successful Long-Term Investing: The Journey

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Successful Long-Term Investing: The Journey

Big Picture
Turbulence, Temporary or Terminal?

Thoughts, Actions?

Successful Long-Term Investing: The Journey

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Successful Long-Term Investing: The Journey

Gauging Momentum: Relative Strength Index (RSI)

RSI is based on closing prices

www.StockCharts.co

Successful Long-Term Investing: The Journey

Few Moments with Desmond & Elder: Sentiment

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

Successful Long-Term Investing: The Journey

Changing of the Colors: Advent of a Bear Market?

Successful Long-Term Investing: The Journey

Where are we now? Potential tipping


point?

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Successful Long-Term Investing: The Journey

Selling a stock is not un-American.


Dont hold because youre stubborn
and dont 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, childs
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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Successful Long-Term Investing: The Journey

Dont be afraid to sell.


Portfolios CAN be
improved!
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!
Improve the expected returns. Maintain the quality of the
holdings. Keep the overall sales growth forecast (or
dividend yield) strong enough. Prudently diversify.
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Successful Long-Term Investing: The Journey


1. Were 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.

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey

Trends/Forecasting

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

Successful Long-Term Investing: The Journey

Housing Price Index (Warren/Troy/Farmington Hills)

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

Successful Long-Term Investing: The Journey

Successful Long-Term Investing: The Journey