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How a Straight-Up Focus on Investments Still Works

By Crucial Clips     May 30, 2018
The following text is a transcript of a portion of a speaker's presentation made at an industry conference or during an interview. This transcript solely represents the view of the individual who spoke, and not the view of Financial Advisor IQ or any other group.
Source: FA-IQ, Mar. 22, 2018 

RITA RAAGAS DE RAMOS, SPECIAL PROJECTS MANAGER, FINANCIAL ADVISOR IQ: Hello, I’m Rita Raagas De Ramos from Financial Advisor IQ. And with me today is Jim McLaughlin, senior vice president for investments at Princeton Wealth Advisors, which is part of the Raymond James network. Your firm focus is on running a plain vanilla value-based investment for your clients. What led you to focus on this approach?

JAMES MCLAUGHLIN, SVP, INVESTMENTS, PRINCETON WEALTH ADVISORS: Rita, I’ve been doing this a long time. I got registered in ’82. And so I’ve learned along the way, and it just became something that I felt very comfortable with in terms of reading textbooks on investing, and just becoming comfortable with owning liquid securities and mostly equity securities, and came to have a belief that while there is no free lunch in investing, value investing seems to make a whole lot of sense.

RITA RAAGAS DE RAMOS: Can you give an example of where your clients’ assets are allocated?

JAMES MCLAUGHLIN: Let’s say the biggest portion of the book would be in mutual funds, followed by individual equities, where we manage three different styles of individual equity investing. We have a core style on equity income, and then an international style. And then to a lesser degree, at this point in time, bonds and cash.

RITA RAAGAS DE RAMOS: What do you think is the advantage of investing in plain vanilla investments, compared to what other advisors may be pushing, which is more innovation or more aggressive strategies?

JAMES MCLAUGHLIN: Well, again, I think it’s just because of what I’ve become comfortable with over the years. I’m a big fan of Warren Buffett. And obviously, he, over the last couple of years, is more interested in private equity investments and owning the whole companies. He has done a fantastic job for his shareholders and investors by owning publicly-traded securities.

And while there may be an allure to different types of illiquid investments, or what I would say, some investments where we have less knowledge of what’s going on, I just found out that for me, it doesn’t work for me. I’d much rather know what I own, and that seems to be in the public equity area and also mutual funds, where the managers have a very long-term track record of doing well for their clients.

RITA RAAGAS DE RAMOS: Since many of your clients are high net worth investors and many of your investments are in plain vanilla value investing funds, does it mean that they’re pretty calm whenever there’s a volatile period in the market?

JAMES MCLAUGHLIN: It wasn’t always that way. But when we have volatility, as we recently had in January and, well, February of this year, I wish I had a nickel for every client who said to me, well, I don’t bother calling you anymore when this happens because I know what you’re going to say, and why waste my time? So we have traditionally used volatility as entering points into equities as opposed to the opposite.

RITA RAAGAS DE RAMOS: Do you see sell-offs like that as an opportunity?

JAMES MCLAUGHLIN: Indeed, indeed. Every meeting I’ve done in the last year, pretty much, I would tell clients a correction is inevitable. It’s not that we try to plan for it. I think that’s been proven to be a very difficult thing. You could have tried to plan for that two years ago, three years ago, four years ago. But we certainly see the bigger the selloff, the greater the opportunity. Buy low, sell high sort of thing.

RITA RAAGAS DE RAMOS: Since you’ve been an advisor, how has your own investment philosophy changed, or has it changed?

JAMES MCLAUGHLIN: For better or for worse, my own investment philosophy is the investment philosophy, again, along with my partners, the one that we’ve developed for our clients. And so we will not recommend any investment to a client that we either don’t own or won’t own in the near future. The classic we do eat our own cooking. So the philosophy that I have, that we have, which is very, very geared towards individual equities at this point in time and, publicly traded mutual funds is the same for both.

RITA RAAGAS DE RAMOS: Thank you.

JAMES MCLAUGHLIN: Thank you, Rita.