Investing

After thinking about it for a while, I have decided to write about investing topics that interest me here at www.dr-eriksen.no/investing. Even though I am a professor of mathematics at BI Norwegian Business School, I am not writing here in that capacity. If you are looking for mathematics, you should go to www.dr-eriksen.no. You will not find much about academic finance here either. Instead, I plan to write about my investing style and some of the companies I own or that I am interested in.

Disclosure: I own many of the companies mentioned on this web page. The writing is my own, and it expresses my own opinions at the time of writing. I may change my opinion at any time. Additional disclosure: Not investment advice. I am not an investment adviser. You must take full responsibility yourself if you make any decisions based on what you read on this web page.

The purpose of investing

Why do we invest? For me, the following factors are important. I am of course paraphrasing Benjamin Graham for the first two, while the last one(s) is inspired by David Gardner at The Motley Fool.

1. To preserve the principal
2. To get an adequate return
3. To learn
4. To have fun
5. To realize the best vision for our future

While there are many ways to invest with financial results satisfying (1) - (2), they are sometimes in conflict with (3) - (5). Index funds are not for me, and I prefer equities over bonds (at least until I can get norwegian government bonds with 13 1/4 % coupons once again -- returns that are expressed as fractions and not in decimal form would make them especially tempting).

Investing style

How do we invest? I prefer to invest in common stocks of excellent companies, and I use two different investment styles:

• A concentrated portfolio of companies I know well and follow relatively closedly
• A diversified portfolio of companies I like but don't try to follow closedly myself

For the concentrated portfolio, I prefer to stay local (Oslo Stock Exchange) and stick with what I know best (banks and seafood companies). I prefer companies that stick with what they know best, and prefer good operations with a relatively predictable cash flow over asset plays. Hard as I try, I still cannot stay away from shipping for long; it scores high on (4), but alas, for me, low on (1). Instead, my strategy is now to keep the bets small in this area.

The concentrated portfolio used to be close to 100% of my portfolio. Today (7th of Aug '20) it makes up 2/3 of it. It was quite clear to me for a long time that to invest in technology and health care companies should not be done on Oslo Stock Exchange; the companies on Nasdaq look far more interesting. However, I felt that this was outside my circle of competance, and I hesitated for a long time.

Luckily for me, I started to follow David Gardner at the The Motley Fool. For some years, I subscribed to the entry-level newsletters Stock Advisor and Rule Breaker, and listened to the podcast Rule Breaker Investing before finally making the leap in December 2018. I became a member of the portfolio service Blast-off and bought into a diversified portfolio of US and global growth stocks. It was an expensive membership for me, but worth every penny and it scores very high on all five factors (1) - (5) mentioned above. Since then, I have become a member of several other portfolio services from The Motley Fool, and I have today a large diversified portfolio (63 companies) of great companies that I would never dream of owning in a concentrated portfolio.