“Learning is not attained by chance, it must be sought for with ardor and attended to with diligence”

– Abigail Adams

It was in January of 2000 when our UPS deliveryman told us it was his last day on the job (he had 9 years under his belt at UPS). He quit because he was making more money “day trading”. We often wonder what happened to him. Do you know anyone that is willing to quit his (or her) job in order to be a brain surgeon or attorney after reading a few magazines or books? Why someone would work so hard to accumulate wealth only to risk everything they have saved based on something they read in magazines and/or watched on CNBC still remains a mystery to us. Good long-term performance comes from life long learning and diligence. The last few years have shown the importance of knowing what you are doing.

Our success in navigating through the past two years and making money for our clients comes from our disciplined, team oriented investment approach. Not only has our model been correct in avoiding the technology crash, but also doing our “homework” on the funds we invest in has paid off. Many (so called) professionals place money in mutual funds without doing any significant research. Many managers and fund companies have told us that we are one of the few firms in the country that truly does in-depth research of the funds we invest in. Below are a few key things that we look for when selecting our mutual funds.

Sound Investment Philosophy

It is imperative to truly know each fund’s investment philosophy and that the philosophy has not changed. Near the end of the technology craze, many value mangers changed their model in order to include technology stocks in their portfolio. At the absolute wrong time!!!!! We know how hard it is to stick to a disciplined investment philosophy. At the beginning of 2000, we had pressure from a few clients to invest more in technology. You remember the mantra – “technology is the wave of the future”, “it is different this time”, etc. We did not relent to those pressures (many investment firms did!). In fact, we lost a few clients because of their zeal to own technology stocks. Obviously, our disciplined investment model proved correct. We expect the same type of discipline from our mutual fund managers.

Place your money where your mouth is

If we are going to make an investment in a fund, we want to make sure that the lead manager and research analysts have their own money in the fund. In many cases, a significant portion of their investment assets are in the fund. Managers that have their own investments at stake, perform more due diligence when researching stocks to buy. We believe this so much that anyone that works at THOR can only invest in mutual funds that our client’s money is invested in. You know we are watching your assets as closely as our own – we have the same holdings!

Retention of Managers and Research Analysts

In this day and age of the “star manager”, we want to invest in funds where the manager(s) and research analysts have a reason to stay. In most cases, they have ownership in the investment management firm or can become an owner. We spend more time getting to know the managers that do not have an ownership interest. They know our approach to investing and if the team leaves, we will follow the talent. We tend to be one of the first firms they contact before or immediately after they move.

There are many other factors we look at when selecting funds. It is not an easy process for a fund to be approved by our investment committee. We love the question “what do we think is going to happen to the stock market this year?”. We don’t know which way it is going to go. However, the one thing we do know is that we have the best managers in the world managing the mutual funds in our clients accounts.