Create Your Own Investment Philosophy!

Motley Fool analyst Jason Moser chats with Rick Engdahl in a side-of-desk interview about developing a personal investment philosophy and shares his own four-point system for deciding whether a particular stock is right for his portfolio.

In this video segment, Jason points out that an investor's philosophy is a personal thing and will evolve over time. Having a clear, simple philosophy as an investor provides a starting point for evaluating stocks in the light of your personal interests and priorities.

A full transcript follows the video.

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Jason Moser: I think that, first and foremost, you have to really determine what your goal is, as an investor. What are you trying to accomplish? I've referred back to the point -- are you trying to grow your wealth, versus you're trying to protect your wealth?

That's really a stage-of-life kind of thing. If you're 65 years old, then you have to focus a little bit more on your asset protection, so I think determining where you are -- what stage in life you're in, and what your goal as an investor is, what are you trying to do? -- I think that can really help dictate, from there, your philosophy.

You go into this with eyes wide open, believing that it's always something that can change. It's fluid. I think it's something that ... it needs to ring true with what you believe as an investor. What I believe may not be what you believe, and it may not be what someone else believes, either. It's a very individual process.

I like to keep it simple, simply because I feel like if I had to remember 15 steps then that might not be so easy. For me, it's four basic steps, and a lot of gray area in between those four steps. They open the doors for a lot of discussions and a lot of studying, but understanding your goal as an investor, what you're trying to do.

I think the key is to make sure that you are investing in something that you understand and that you enjoy.

If I can't get anyone to do anything else in regard to their philosophy, I feel like if you're investing in something that you understand and something that you care about, then you're going to follow it. You're going to have that passion and that need and the desire to follow it and learn about it, even if it's just one company.

The example I can always kick back to is with my daughters, at 7 and 8 years old; that's how they do it. They own Starbucks, Apple, Nike, and Disney. But they're 7- and 8-year-old kids. That's the stuff they like and care about. They get it, so they have an interest.

If I had them investing in Joy Global, for example. I don't know that they'd really care all that much about it. Maybe as they get older, maybe they'll want to learn something else, and that's something they invite into their circle.

I think that making sure that you have something you care about, having something you can repeat, and having something you can just always fall back on. I think the beauty of a philosophy is it gives you something to fall back on and rely on.

When all else fails, that is your North Star, so to speak. That's where you can look and say, "All right, this is what really matters to me. Let me go back to the basics."

Really, I think investing is as difficult or as easy as you want to make it. I prefer to make it relatively easy and enjoyable. It's worked for me up to this point, and I feel like I can continue to make it work. As I get older, the philosophy will change a little bit, I'm sure, but it keeps it moving along. 


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