Business Perspective Attitude and Owner Mentality

Stocks, by their very nature, are long-term; evaluating them, as true businessmen do, takes into consideration the years it commonly takes to recoup initial outlay, conservatively vouching on the cash-generating economics of the venture.

This is Part 2 of a Series. Go to Part 1: A Filipino Hedge Fund

Note: The following is a portion of a letter addressing my partners which states, clarifies, and addresses the operating principle behind that private investment partnership (i.e. hedge fund) I began. I would recommend that you start your reading at the beginning.

With this business-perspective attitude and owner mentality towards our partnership’s investments—treating them as real businesses with operating realities and not merely paper assets whose value wiggles daily—we naturally take the position of being long-term investors, buying firms and holding them indefinitely. It is only intuitive that we follow this long-term approach if we really want to take advantage of their true compounding power.

Besides, businesses, by their very nature, are long-term; evaluating them, as true businessmen do, takes into consideration the years it commonly takes to recoup initial outlay, conservatively vouching on the cash-generating economics of the venture. With that, we do not attempt to aggressively bet in the stock market as market timers or traders, trying to gain from short-term price fluctuations—I have long conceded I cannot accurately predict price movements in a manner risk can be mitigated at an acceptable level. We only bank on the fundamentals of the business, which I believe is more predictable than the madness of men. Continue to Part 3: Conservative Expectation on Rate of Return