Editor’s Note: Regular Daily readers know PBRG Founder Mark Ford is one of the most conservative investors you’ll ever find. It wasn’t until Tom Dyson created PBRG’s Legacy Portfolio—the surest, safest way to accumulate substantial stock market wealth—that Mark committed millions to the stock market.
Now Mark’s decided to invest more of his own wealth in the stock market. It’s a system his longtime business partner—and fellow stock skeptic, Agora Inc. Founder Bill Bonner—is committing $5 million of his own family trust to.
I wanted to find out why an ultra-conservative investor like Mark would commit more funds to stocks… even as today’s markets appear “toppy”…
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J. Reeves, editor, The Palm Beach Daily: Mark, you’ve been skeptical of the stock market over most of your career.
It’s led you to concentrate your wealth mainly in private businesses, real estate, gold, and cash. Why?
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Mark Ford, founder, Palm Beach Research Group: Two reasons…
1. Experience. During the 1980s I was very involved in marketing financial products. Not just newsletters… but books, audio programs, live seminars, and so on.
I saw firsthand how often inexperienced (though typically older) investors were talked into investing in schemes and strategies that were too risky for their situations.
I helped sell a lot of small-cap investment newsletters. Because of the nature of that sort of investing, many of them had negative track records.
Speculations are fine with a portion of your money you’re comfortable gambling with… but too many investors want to believe they can get rich by speculating. That makes them vulnerable.
2. Logic. As a youngish man involved in lots of growing businesses, I recognized how difficult it was for me to predict the success of any business outside of my core knowledge.
It was tough enough to know with any certainty how one of my own businesses—which I knew intimately and had some control over—would do in the future. So how could I guess correctly about the outcomes of businesses outside my area of expertise?
My knowledge of the stock market was superficial. But I did know that over the long term, the market was a good place to earn 8-10%—if you didn’t get greedy.
So I limited my stock investing to a small portion of my investing (around 10%).
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J.R.: What convinced you to finally commit millions of your family’s wealth to the stock market?
Mark: It happened after I read my first book about Warren Buffett. It helped me understand how he did what he did. His approach—long term and super safe—appealed to me because it was the strategy I used in buying, selling, and building small businesses.
I liked the idea of putting part of my investment portfolio aside for long-term growth by investing in companies that consistently provided income (through dividends) to investors. This orientation toward income was also a pillar of my private investing philosophy.
The combination of income and long-term growth made sense to me. Then I noticed that the best investors I knew firsthand, big names in our industry, were doing the same thing with a portion of their portfolios. It gave me confidence.
I began with an amount that represented less than 1% of my net worth then increased that as time passed. Now these sorts of stocks comprise a much larger portion of my investment portfolio. The more I learn, the more comfortable I feel about them.
Until recently, my sole portfolio of this type was the one I asked Tom Dyson and Greg Wilson to build for me—our Legacy Portfolio. But I’ve watched Bonner & Partners’chief investment strategist Chris Mayer’s success over the years…
I’ve seen the audited statements of his track record and I’m—to say the least—very impressed. So I’m doing what I did with the Legacy Portfolio: starting with a modest investment and planning to increase it as I learn more and gain more confidence.
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J.R.: Mark, I know you adhere to Warren Buffett’s No. 1 rule of investing: Don’t lose money. What makes you confident your chosen equity investment strategies will protect and grow your assets—especially with markets poised to contract?
Mark: With the Legacy Portfolio, I have a long-term perspective. It’s comprised of companies that aren’t going to disappear. They have proven track records—over decades—of paying and increasing their dividends. I love rising income payments…
So if the market goes down, it represents a buying—not a selling—opportunity for me. I’ll buy more of these stocks if I can get them cheaper. It lowers my buy-in price, which means my return on investment (ROI) over the long term will be greater.
Chris Mayer’s approach is more aggressive than the one Tom and Greg established for the Legacy Portfolio. But it’s still based on fundamentals.
His long-term track record—17% annual returns—is amazingly good… even during dips. (I understand he beat the market by 48% during 2008’s plunge… and proved profitable in both 2008 and 2009, even as the Great Recession decimated most investors’ portfolios.)
So I’m stepping in cautiously at first… but with great expectations.
J.R.: I know our subscribers appreciate knowing the details of your own money-management decisions, Mark. Thanks for sharing them here.
Mark: Anytime.
Reeves’ Note: If you’ve ever wanted to invest alongside multimillionaires Mark Ford and Bill Bonner, tonight is your last chance to try out Chris Mayer’s new advisory… before Mark and Bill invest hundreds of thousands in Chris’ first pick. Click here to subscribe instantly. (Or to learn exactly why “the ultimate stock market skeptic,” Bill Bonner, is investing his family’s money with Chris, click here.)