FAQs

Q: Why should I trust you?

A: You shouldn't. You shouldn't trust me or anyone else with the future of your investments. At least, not right away. Check it out first. Take your time.

The greatest value of this entire site is in the Commentary section which is free and available to everyone. Make sure you read it. It will help you decide if we are trustworthy.

Make sure you get what we promised. We promise to show you how to build a high income portfolio of stocks and bonds.

Make sure we eat our own cooking. Do we invest in the same stock and bond ideas as we give you? The Model Portfolio is an actual fund managed continuously by our chief investment officer. It is made up of stocks and bonds we recommend to you.

Q: Why do I need you? I have a broker who gives me advice and invests my money in mutual funds.

A: You don’t… UNLESS

- you need more income
- you want investments you can understand and manage
- you want to outperform the markets

Q: How can you help me invest?

A: We show you, step by step, how to build a high income portfolio of stocks and bonds. We show you the decisions you must make before you start. We show you the importance of plans, objectives and rules.
In short, we do not give you a fish, but teach you how to fish so you can feed yourself forever.

Q: Why do you think you can outperform the market?

A: Outperforming the market is easy. But it requires you adopt a difficult mindset. You must be willing to be different. If you want to be like everyone else, expect to perform like everyone else, which is the market less costs. Or worse!

I am very willing to be different. I buy when the crowd is selling and I sell when they are buying. I have rules; I follow them. A research driven, highly concentrated, high income, value oriented investment process consistently outperforms markets. That is what we do.

Q: Why should I pay you?

A: You get step-by-step instructions on how to build and manage a high income portfolio from an experienced, qualified portfolio manager. You get detailed independent investment research that you will not find anywhere else.

We think this is a unique and extremely valuable service. The cost of our basic service is the equivalent of one dollar a day. This kind of value simply does not exist anywhere in the investment world.

Q: What’s a portfolio? You talk a lot about portfolios. Why is this important?

A: A portfolio is like your house. Your house is a collection of rooms, each with different characteristics, size, and function. But they are all connected and, together, they are much more than just a collection of rooms. Together, these rooms accommodate your family and provide a variety of services.

A portfolio is similar. It is made up of different investments all working together to accomplish your goal. Each investment is different… different industry, business, markets, capital structure and risk profile. But unlike your house, all rooms in a Panhandle Portfolio are the same size.

You do not add rooms to your house without a great deal of thought, planning and preparation. Otherwise you end up with a hodgepodge of rooms, unrelated and disconnected to each other.

Most mutual funds are managed this way. It is common to have over 100 holdings ranging in size from 5% or 10% down to miniscule positions of a fraction of one percent. New positions are routinely added to the already too long list. Most mutual fund portfolios remind me of the old Vermont farm house I roomed in while I was in college. It had rooms without interior access and bathrooms in the hallway. You could live there but it was confusing and not very functional.

Our portfolios are completely different. We own no more than ten investments. A new investment cannot be added unless it unless it improves the overall portfolio. And a new investment cannot be added unless an existing investment is sold. Setting a rigid limit to the number of investments in the portfolio is called “sell discipline” and is one of the most important rules in portfolio management.

Building a portfolio is a construction project. It is similar to building a house. And managing the portfolio once it is built is also like maintaining your house. Once the house is built, the work is not done. Your house needs to be maintained. The yard needs to be mowed, the driveway shoveled in winter, the mail collected and so on.

A portfolio is the same. We monitor and collect the interest and dividends. We invest the cash and regularly rebalance portfolio holdings.

Q: Why aren’t your portfolios more diversified?

A: Our portfolios are both concentrated and diversified. They are concentrated to ensure the benefits of our research are realized. And they are adequately diversified as the maximum benefits of diversification are achieved with portfolios ranging from 7 to 17 holdings.

The problem with most funds is they are over diversified. This ensures worse than market performance. It ensures limited impact from research, wasting valuable resources.

Q: Why do you use the words of Solomon to guide your research?

A: I find the Bible a valuable guide to understanding markets and investments. Solomon’s words assure us markets go in cycles. This is a powerful and reliable base to understand and address periods of dark pessimism when capital values are declining and periods of wild optimism when markets have exceeded all boundaries of normal understanding.

Proverbs offers many financial guides as well, such as "He who gathers money little by little shall make it grow". This is a practical and suitable financial plan for most of us.

Q: Do you have references?

A: Sure. But why would you want them? Anything I show you is somebody else’s opinion. References are someone else’s opinion, just like performance is someone else’s money. What matters is your opinion and your money.

Q: Where is your performance record?

A: This is the wrong question. A performance record is the record of somebody else’s money, not yours. If it was your money, you would not ask.

I was an international pension expert responsible for several billion dollars of my employer’s pension assets in four countries, Australia, UK, Canada and the US. I assure you performance was a daily tool and not an academic issue for me. I understand fully its importance and its pitfalls.

Performance is the ultimate measure of the contribution of a fund manager, so it is important.

But if you think performance is the first and only question, this site can not help and I wish you well in your search for the best performing manager. Let me offer you a parting gift of an observable and repeatable fact in the financial markets. The best performing manager this year will never be the best performing manager next year. Hire him if you dare.

The right question is “How is my high income portfolio going to perform this year and next?” If you have established objectives, it is easy to measure. You know what the income is as you receive it on a regular basis. And you will be able to follow the value of your investments every month.

Panhandle Portfolios posts the performance of the High Income Fund at the end of every month.

Q: You sign your name with three letters after it, CFA. What is a CFA?

A: A CFA after your name means you are a Chartered Financial Analyst. It is the designation awarded by the CFA Institute to all who successfully demonstrate a thorough knowledge and understanding of the economic and financial issues influencing investments. It is the ultimate recognition of a qualified financial manager.

It is not awarded lightly. A candidate must pass three comprehensive exams one each year consecutively for three years. The success rate is about 50% for each level of exam. On average there are 12.5 CFA’s awarded for each 100 candidates that begin. I received my CFA award in 1990.

I am required to adhere to a stringent Code of Ethics. As a CFA, I accept a fiduciary duty between us, which means I must ALWAYS put your interests before my own.

In short, these three letters behind my name means I can be trusted to give you the very best investment advice and service I can.

As important as it is, it is meaningless unless it is combined with years of practical experience.

Q: There are lots of CFA’s. Why are you better than all the others?

A: I’m not. A CFA simply tells the world you are qualified to manage investments. It does not mean you are any good at it. There is no school to show you how to take advantage of greed and fear. Only experience shows you how to be "greedy" when others are fearful and to be "fearful" when others are greedy.

There are very few investment managers with operating experience. While they know volumes about a company, they don’t know how to meet a payroll. They don’t know the importance of qualitative issues such as customer service. They don’t know the damage that can be done by poor pricing strategies.

I do. I have established, managed and grown several companies in different businesses. They ranged from commercial real estate brokerage in New Hampshire to recycling electronics in Beijing, China.

I have struggled with the same investment and portfolio issues you struggle with. I analyzed, dissected, and evaluated hundreds of investment strategies. I interviewed hundreds of very successful investment advisors in a wide variety of products, from options strategies to international emerging markets equities. I managed these managers. So I am knowledgeable in many investment strategies and how and why they work.

There are very few CFA’s with the wealth and variety of experience I can offer.