Investments & Risk Management

ALJAR, Inc. enables and supports businesses, families and foundations as they build wealth. Companies with consistent cash flow, needed products or services, and cultures of integrity often present excellent opportunities when the price is right.

 

When businesses enter an earnings acceleration phase after emerging from the bottom of a cycle or from new products and markets,there are often substantial opportunities for profit. Firms with substantial assets (especially cash assets) that are under-appreciated because of lackluster earnings frequently provide low-risk rewards to patient investors.

Risk vs. Reward

 

Short-term fluctuations are either painful or pleasant and may try your patience. Greed and fear lead many investors to foolish decisions. For example, as stock prices rise most investors become increasingly excited about stocks' potential. Comfort levels and demands for stock increase. The higher stocks rise, the greater the perceived opportunity.

On the other hand, when stock prices decline, these same investors experience withdrawal. Comfort levels and demands for stock decrease. The lower the stocks fall, the greater the perceived risk. Behavior based on these perceptions is logically foolish and should be avoided.

Making investment decisions involves balancing risk and reward. Individual objectives, risk tolerance, and market conditions dictate an appropriate allocation of assets. Sound analysis of individual situations, thoughtfully built into a portfolio, should lead to satisfactory, long-term results.

THE BOTTOM LINE

The intrinsic value of a business (calculated as the current value of all the future earnings of the business) is difficult to determine. Interest rates, products, and management will change. Some years are more profitable than others. In general, these changes are not as volatile as the changes in the shares of stock, which are supposed to represent fractional ownership of a business.

 

Level-headedness in the face of adversity coupled with confidence in the systematic analysis of individual businesses provides intelligent investors with larger long-term opportunity. Short-term fluctuations in stock prices are difficult to predict on any consistent basis.

Consequently, ALJAR Investments, Inc. does not time the market or trade stocks in an effort to generate returns. The mode of operation is investment selection. After fees and expenses, the goal is to achieve long-term investment performance superior to the returns on funds you might otherwise obtain with a similar asset class weighting.