Fighting For The Edge

In 1951, Warren Buffett took the train from Omaha, Nebraska to New York City at the age of 21. He was going to the headquarters of GEICO, an auto insurer, to learn details about the insurance business firsthand. Buffett said himself, “That afternoon changed my life.” Nowadays, it is becoming increasingly difficult for investors to secure an informational edge. 

The financial markets are extremely competitive. Without a plan and discipline, no one leaves the trading floor with a positive return in the long term. The bad news for investors is that exclusive knowledge is hardly available anymore. Today, in-depth information about companies, business models and competitive dynamics is democratized via expert networks. The knowledge that Warren Buffett was able to secure personally is now available to all paying investors via international media.

He and some of his contemporaries had another advantage. The ability and training to analyze companies accurately. Income statements, balance sheets and cash flows spoke to them. Today, these tools just get you to the starting line. So, no more analytical edge.

What remains is an advantage that every person and organization can cultivate for themselves: their own behavior. Let us face it, how many people do you know who have held Apple, Google or Amazon since they went public? Probably not even one. Fear, panic, greed and other emotions seduce us into rash actions. Many would like to participate in the long-term success of a company through equity investments. But only a few succeed. 

In Gutmann's investment strategies, we have imposed explicit discipline on ourselves: in terms of position size, regular adjustments, control of concentration risks in themes and sectors, maturity management, and much more. In implementation, we pay attention to efficiency and the lowest possible costs. Changes in the portfolio are carried out with sophisticated computer support. 

Our clients' investments give them a clear advantage over other market participants who are less disciplined and act with more emotion.