Follow Us

  • Facebook Basic Square
  • Twitter Basic Square

Investment Techniques

At Blackstone Wealth Management we follow the philosophy of the late Benjamin Graham who is known as the “father of value investing” and mentor to Warren Buffet. Graham’s philosophy has a few core principles:

 

  • A stock is not just a ticker symbol, but ownership in an actual business, with underlying value that does not depend on its share price.

  • The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists.

  • The future value of every investment is a function of its present price. The higher the price you pay, the lower your return will be.

  • No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. Only by insisting on a “margin of safety” — never overpaying, no matter how exciting an investment seems to be—can you minimize your odds of error.

 

Blackstone Wealth Management invests with the goal of building an income stream through dividends rather than investing for capital gains. This does not mean we are opposed to investing in companies that do not offer a dividend, however we tend of be more attracted to dividend paying companies. Reasons for this bias include:

 

  • Dividends provide an investment return not contingent on what the market “thinks”.

  • Dividends provide a cusion in market downturns.

  • At times, dividends can help tell the true story of a company because dividends are paid in cash. To pay a dividend you must have the cash to pay it which limits possible accounting gimmicks.

  • As companies increase their dividend payout the stock price inherently increases as well because the stock becomes more demanded due to the increased yield.

 

Blackstone Wealth Management will use derivative tools to hedge investments. There are specific times when we will believe the market as a whole or a single security is overpriced. We do not try to predict a top and in certin cases we do not want to sell and give up dividend income streams, therefore we use hedging strategies to protect assets and possibly raise cash to buy securities at a lower price.