Investing advice, strategy from fund that survived Great Depression - Business Insider

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The CEO of one of the only funds that survived the Great Depression walked us through his unique, market-beating strategy — and shared 3 stocks he's betting on for the future

Another unchanging way he sees the firm creating shareholder value is by providing good returns for a fair fee. The Adams equity fund has an expense ratio of 0.58%. That's lower than the 2018 average of 0.71% for other large growth managers, but higher than the industrywide average of 0.48%, according to MorningstarHe takes a sector-neutral approach to investing.

"We do that because I would be terrible at making sector bets — flat out terrible," Stoeckle said. "I'm not a macro guy. Where I think we have an edge is at stock selection."It starts with aNext, he uses a quantitative model created by Empirical Research Partners, a broker-dealer, to rank stocks by factors including momentum. The final step involves using charts and technical analysis to determine whether the timing is right to make an entry.

Stocks that survive these steps are then ranked again, and the top-rated ones make it into the portfolio. The entire process is supported by a team of analysts — one for each S&P 500 sector. Once the picks are in the portfolio, the next crucial step is risk control. Stoeckle said mastering this piece of the puzzle is what has helped him outperform other funds even though they own many of the sameIt involves periodically taking profits on big winners so that they don't cause a portfolio wipeout if they crash.

For stocks on the way down, he follows the following rule most of the time: sell half of the active position if the stock falls below its 52-week low relative to its sector. And after the sale, the sector analyst must make a case for continuing to hold the stock all over again.

 

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