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One of our core beliefs is that investors are concerned about losing money in bear markets but also want competitive returns over time.
Unlike the buy and hold theory, we believe it is prudent to sell aberrant stocks in turbulent markets to preserve capital. By losing less, one has more money to work with on the upside.
We believe several different investment styles have merit, and look for companies that possess multiple of these characteristics that have historically led to out-performance.
Corporate earnings are generally cyclical and changes in these earnings have a direct correlation to the price of a company’s stock.
We believe the rate of change in corporate earnings has a direct correlation to the relative price of a company’s stock. There are times when cyclical stocks have faster earnings growth than pure growth stocks. We believe that this is the reason there are times when “value” outperforms “growth”.
We believe it is easier for smaller companies to grow faster than larger ones, and for this reason, we look at all market-capitilizations.
We believe that smaller companies are more volatile because they have less liquidity.
We believe interest rates have profound implications on the pricing of capital assets, and for this reason static asset allocation is sub-optimal.
We also know, not believe, that central banks manipulate interest rates
These beliefs are the core reasons we developed the investment strategies we employ. These strategies are not perfect. Investing involves risk, and these strategies do not guarantee an investor will not lose money. There will be periods of under-performance. In numerous time-frames, however, this process has ranked very high in performance relative to other managers of similar investment styles according to Informa Investment Solutions/PSN . This out performance and long-term performance lead us to believe that Sheets Smith Investment strategies are sound and repeatable over time.
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