Warren Buffett would love Equius if he knew about us.
Yes, the greatest stock picker of all time—the one man whose reputation Wall Street has built a massive and extremely profitable industry around—would whole-heartedly endorse the “Equius Approach.”
Why? Because what has made Buffett so successful over these many decades has not been his stock-picking talent (a cursory review of his holdings through the years would convince anyone of that), but rather a set of principles that are extremely rare among today’s mass of professional and amateur stock pickers and market timers. These principles are the foundation of our approach as well, but we apply them in a much more modern and multigenerational (i.e., sustainable) way.
Discipline: Buffett implements his investing strategy with a rare degree of discipline, derived from the confidence he gained through the knowledge imparted to him by Ben Graham, his teacher and mentor at Columbia University. Buffett was also a keen observer of the investment industry, and his unusual discipline no doubt was reinforced by the extreme lack of discipline he saw (and exploited) in his fellow investors—most importantly, the “professional” ones.
Focus: Buffett did not deviate from the core investing principles he learned from Graham, although he always kept an open mind and learned to work into his investing discipline nuances taught to him by Philip Fisher, Charlie Munger, and a handful of other brilliant investors with high integrity.
The long view: Unlike the majority of investors, who anxiously wallow in the uncertainty of monthly, quarterly, and annual forecasts, Buffett has always taken the long view. His patience with markets and his belief in American ingenuity are unshakeable, bolstered by his unique discipline and focus.
Simplicity in execution: Buffett extracted the most important techniques and principles from Graham and others and applied them consistently over decades without deviating into minutia and trivia. In contrast, the millions of professional investors who did—or did not—earn a CFA designation as a result of studying Graham’s and David Dodd’s Security Analysis developed thousands of variations on stock-picking and market-timing techniques that have collectively resulted in a failure rate of 80% or worse over time.*
Few people could convincingly argue that Buffett’s talents can be replicated by another individual or team of experts (although holders of Berkshire Hathaway stock are ever hopeful I’m wrong). He’s simply one of a kind—a man of conviction, untainted and unswayed by the dominant side of our industry. Sure, there are good people that might come close to Buffett’s talents, but can you name them? The point is, even a man of Buffett’s long and unassailable reputation has had very little positive influence on that side of our industry.
But as Equius has shown, the principles Buffett follows can be institutionalized in a modern firm in a way that can be beneficial to multiple generations of our clients and our team. Maybe Buffett’s done that at Berkshire. But unlike Berkshire, our team is not immersed in the side of the industry that constantly pounds away at these principles for their own financial gain and in conflict with what’s right for investors.
This is not to say that Equius is invulnerable. But an extremely strong foundation has been laid and the benefits of our principles fully explained, appreciated, and preserved by the next generation of Equius leaders, advisors, and support staff. We work every day to avoid being corrupted by a principle-challenged industry.
We also are supported and inspired by leading-edge firms like Dimensional Fund Advisors, whose extensive experience and peerless execution of modern financial economics research principles are invaluable, as well as a global peer group of advisors we learn from (in both positive and sometimes negative ways) to always be at the top of our game for our clients.
Finally, we’re privileged to have clients who understand and are confident that the principles we’ve acquired from Buffett and applied to the modern financial markets will meet—and likely exceed—their expectations for growing and maintaining their wealth for many years to come. We intend to preserve and earn this confidence always.
* See Dimensional’s Mutual Fund Landscape and Standard & Poor’s SPIVA reports.
Equius Partners is a Registered Investment Advisor. Please consider the investment objectives, risks, and charges and expenses of any mutual fund and read the prospectus carefully before investing. Indexes are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.
Past performance is not a guarantee of future results. This information is provided for educational purposes only and should not be considered investment advice or a solicitation to buy or sell securities. There is no guarantee an investing strategy will be successful. Investing involves risks, including possible loss of principal. Diversification does not eliminate the risk of market loss.
© 2020 Equius Partners, Inc.