Investment Philosophy

There are many approaches to investing, most of them valid in their own context. At Peachtree Investment Partners, our approach is selecting stocks and bonds to use in building and managing custom portfolios for individuals and families. In choosing those investments, we begin by recognizing that there are many market factors that neither we nor any other financial firm can control.

These include, for example:

  • Global economic changes
  • Geopolitical unrest
  • Natural disasters
  • Political events
  • Interest rates and currency manipulation
  • Regulatory changes


Because these factors are beyond our control, we focus instead on what we can control:

  • What we buy
  • What we sell
  • When we buy
  • When we sell


We believe that well-run and stable companies are best positioned to weather market storms caused by factors we cannot control. We strive to build portfolios around those companies and then monitor them to ensure that they continue to perform as expected. Then we manage your portfolio to meet your specific needs, including growth and tax considerations.

Specifically, we look at:

Return on invested capital, or ROIC, is a measure of how efficiently a company uses its available capital to generate returns for its shareholders. We believe that companies that are good at using their capital to grow their business and generate returns are more likely to be successful. However, ROIC can be the result of a significant one-time event, so we also look at a company’s trends over time. Our goal is to identify companies that are consistently efficient in the way in which they use their resources to generate results.
Dividends are returns on your personal invested capital. We prefer to invest in dividend-paying stocks for a few very important reasons.

First, dividends provide you with an ongoing income stream, regardless of the price fluctuations of the stock itself. And reinvesting those dividends can make a significant impact on your overall return. In fact, since 1929, reinvested dividends have made up about half of the market’s total returns.

Dividends also can help ease the financial and psychological impact of market ups and downs. There are basically two ways to make money in the stock market: capital appreciation and dividends. But only dividends are certain, and that can make them a potent antidote to volatility.

Finally, we believe that committing to dividend payment often makes company management more transparent and more accountable to shareholders.

Not every stock we recommend for a portfolio pays dividends. However, stocks that do not pay dividends need to show the potential for truly exceptional growth.

Companies need cash in order to grow, so good cash flow is often an indication that a company is in good health, that it is collecting the revenues it is due and that it can pay its expenses without taking on excessive debt. Companies that carry too much debt are like people who carry too much weight: Sooner or later, the debt starts to have a negative effect on the financial health of the company, making it difficult for the company to grow and ultimately endangering its very survival.
Every company has ebbs and flows in its growth, of course, but we look for consistency in a company’s revenue and earnings growth. Our goal is to invest in companies that have continued to grow over time because that may be an indication that they can continue that growth going forward.

Of course, it is not enough to choose good companies. It is also important to use the stocks of those companies to create diverse portfolios and to manage those portfolios in a way that maximizes the strengths of those stocks. In doing these things, we consider:

We believe that in portfolio construction, as in life, too much of a good thing can be bad. Putting too much of your portfolio into a single stock greatly increases the risk of overall portfolio loss if that stock drops significantly for one reason or another. As a result, no single stock can comprise more than 5% at cost of the total value of your portfolio.

We also diversify across asset sectors, although we can increase our allocation to a specific sector if we believe market conditions warrant it. We also keep from 0 to 25% of your holdings in cash, depending on our assessment of market conditions.

However, we do not use mutual funds to create portfolios with hundreds of different holdings. We believe that you can realize the best performance with a portfolio that has a reasonable number of high-quality holdings.
We believe that deciding when to sell a holding is as important as deciding when to buy. We monitor all the companies whose stock we hold to ensure that they are still meeting our criteria. If a holding begins to show signs that it is outpacing its fundamentals, we might decide to pare back the holding or eliminate it altogether.

We also monitor stocks that we believe are underperforming, to determine whether that underperformance is more likely due to outside pressures, such as issues in the sector or problems in the market overall, or due to fundamental problems within the company.

In monitoring stocks, and in choosing stocks in the first place, we rely heavily – but not exclusively – on Value Line. Value Line research gives in-depth, regularly updated data on about 1,700 of the stocks most-actively traded on U.S. exchanges; these stocks are in more than 90 industry sectors and represent about 95% of total U.S. stock market capitalization.
Our clients are investing for the long term. We do not believe in day trading or in short-term market timing. We believe that, like constantly changing lanes on the interstate, short-term trading is likely to increase your chances of disaster without significantly increasing the chance that you will get where you are going faster.

Longer-term investing makes you less susceptible to day-to-day market fluctuations. It gives your portfolio more time to recover from market ups and downs, and thus it allows you to take a more cautious attitude toward risk.

Having said that, however, we understand that every investor has a variety of goals, including long-term goals and short-term needs. We can structure your portfolio to maximize the chances that you will achieve both types of goals.

Although our portfolios tend to be weighted toward stocks, we also include:

Although most of our portfolios are built primarily around stock holdings, we do include some fixed-income investments. With these investments, we focus on short-term corporate bonds. We like to keep the duration between two and six years, and we look for companies that we believe have sound underlying financial structures.

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