How Do You Invest?

By: Bryan J. Koslow, MBA, CFP®, CPA, PFS, CDFA

How Do You Invest?


There’s no shortage of methods for choosing investments. Investment selection is more art than science, but that doesn’t mean you shouldn’t have a system. In the 1980s, Peter Lynch suggested “investing in what you know” or buying the stocks of companies that make products you use in everyday life. Warren Buffett is famous for only investing in companies whose products or services he understands. Jim Cramer implores his viewers to “buy and do homework” rather than just “buy and hold.” Whatever your approach, it is critical to continuously monitor and refine your system as economic conditions change.

Once you’ve selected your investing system, you need to determine the best way to build your portfolio. Today, we have more investment vehicles to choose from than ever before. There are a litany of investment products available with various characteristics and risks.

At Clarus Financial, we look for investment prospects in three categories:

  1. Macro themes: These are longer-term macroeconomic trends that may be emerging or subsiding. Some examples include movements in interest rates and inflation levels, currency fluctuations, anticipated changes in tax laws, demographic conditions, legislative shifts, and geopolitical concerns. In addition to the aforementioned criteria, we carefully consider your investment objectives, situation, and time horizon when constructing your personalized plan.

  2. Sector opportunities: Capital markets frequently overshoot to both the upside and the downside. Moves are often exacerbated by fear, greed, and, more recently, algorithms. These overextended moves can create attractive investment opportunities as market relationships become dislocated. We leverage prodcuts that take advantage of these opportunities.

  3. Bottoms-up stock selection: Our team has developed a screening model to identify fundamentally attractive investment opportunities. We look for companies that are producing significant amounts of free cash flow with growing revenues and strong management in growing business segments.

Please note: From time to time, as we’re searching for investment opportunities, we may uncover companies that appear significantly overvalued. While valuation is important, we also look for things like; companies that appear to have accounting deficiencies, inept management, and/or “fad” products when evaluating our strategies. To manage risk, the maximum exposure to any sector in our portfolios is 30 percent.

Investments are subject to risk, including the loss of principal. Because investment return and principal value fluctuate, shares may be worth more or less than their original value. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Past performance is no guarantee of future results. Please talk to your financial advsior before making any investment decisions.