Doing research and fighting your biases as an active investor
Wharton MBA Claire diversifies across real estate, enterprise tech, and private markets
In this series, we show investment portfolios of real self-guided investors and ask about their investment philosophy. Our goal is to bring a holistic perspective to retail investing and normalize conversations about wealth building.
None of this information is financial advice or recommendation. Do your own research.
Investor profile
Name: Claire
Age: 38
Family: Single
Location: SF Bay Area, CA
Job: Corporate Development & Venture Investor in Tech
Portfolio overview
What type of an investor are you? What are your goals, activity level, risk profile etc?
I like to consider myself an active investor. I have different goals that align with the type of asset I invest in:
Long term goal: Continuously learn public investing and build my track record with the ambition to do that full time later in life
Long term goal: Build a real estate portfolio that will provide me with a stable income stream at retirement
Medium / short term goal: Save money to buy a personal residence.
Some goals will take years — if not decades — to reach, but they all require to start rather sooner than later. For each one, I define a yearly objective. Based on my budget, I set up automatic transfers from my checking account to each account above.
Every investment, whatever its type, includes some degree of risk. When it comes to risk management, I use different approaches based on my investment horizons.
For example, I take an aggressive and risk taking approach (more volatility) when it comes to my personal stock portfolio. I set up a maximum dollar amount for each stock I own (both when I enter a position and when in the portfolio): this amount is defined in percentage of the total portfolio. I also do not short stocks as I never can reach the high level of conviction that I need to execute. For now at least, I believe that it’s not a requirement for me to invest and to make money. Example of stocks I own: TWLO, BABA, CRWD, DHR, MSFT etc.
I take a more conservative approach for the sub portfolio that’s going to be dedicated to buy a personal residence, meaning I am less open to losing a large amount of the principal (less volatility). The portfolio includes REITs, dividend stock, some ETFs. Example of positions I own there: AVB, SPG, EQIX, XLB etc.
In addition, I like to expose myself to disruptive ideas and new ways of thinking so I always try to allocate some capital to early stage startups and crypto (this is a capital I am ready to loose 100%).
My cash plays the role of “working capital” but is also there to ensure an emergency fund for myself and my family.
I enjoy spending time understanding companies business model and as such I spend ~8-10 hours a week working on my active public portfolio. I have been doing this for the past 7 years.
Can you describe your current portfolio and how you got there?
I come from a very modest background and was not exposed to public stock investing from a young age. My parents always worked very hard and invested the little money they had in small properties locally that were intended to give them some financial security later in life, an approach that I find very virtuous for a number of reasons (forced savings mechanism, diversification vs. corporate income, lack of liquidity preventing impulsive purchase decisions among other reasons).
When it comes to my own real estate portfolio I pick locations that I know (e.g close to where I live / have lived) and understand. I select specific properties that I can afford given my down payment (I usually put 20% down + closing fees) and in which I expect to generate a “good” IRR in 7-10 years. In most cases it means that:
It is an area with attractive metrics such as low unemployment rate, driving distance to a major US city/business hub, new groceries stores like Trader Joes
The rent can service the mortgage, taxes and other monthly charges & fees and can generate a minimum positive cash flow each month
There is potential for capital appreciation.
For now, I run my real estate myself but I would consider taking a property manager if I continue to scale.
I got to where I am today by reading A LOT about business and companies. I have always been curious about how things work (studied physics for a few years) and an avid reader. Two stepping stones in my journey were my CFA certification and my MBA at Wharton where I majored in Finance. There I got the opportunity to meet exceptional investors like Joel Greenblatt and Bill Ackman. I do believe that investing is a place of passion and that there is no shortcut for time spent.
Any investment wins or mistakes you can share?
So many mistakes! I started the habit of writing down the rationale for a trade in an excel file so that I can understand more easily my biases and correct them (at least understand them). I think my biggest mistake remains to trade on impulse sometimes (in or out), without creating enough conviction. To counter that bias, I removed my portfolio app from my cell phone so that I don’t buy or sell in one click.
My other struggle is to create a systematic process that leads to an investment decision vs. being opportunistic on a position. I did create some rules and processes but it’s still difficult to pass on a trade, even if it doesn’t fit your style !
I am not that worried about making mistakes at this time, as long as I understand them and can derive some learning. It’s a long journey and I am at the beginning. I firmly believe that a great investor needs to be comfortable with making mistakes because that’s going to happen a lot!
I have a few investment wins that could be attributed to research or luck - we have been in a very favorable public market environment for 15 years, let’s not forget that. If I can name an idea, I got very convinced by DocuSign (DOCU) early on and to this date, it is still the best return in my portfolio. I also found a few stocks a few years back, whose market values were below the cash amount on their balance sheet. Almost all of those have translated into great returns!
What investment opportunities are you excited about in the future?
I do think that technologies like Ethereum have the power to redefine the payment industry and I am very curious to see what it will become in 10 years or so.
Other than that, I try to build on what I know best, enterprise software. So many exciting companies are emerging, scaling and then entering to the public markets every day! We are only in the infancy of enterprise software, some industries being very early on their technology transformation - it will create tremendous pockets of wealth for decades to come.
Where do you get investing information, inspiration and validation?
When it comes to real estate and my personal stock portfolio, I like to do my own research. I always go back on reading 10-Ks, investor presentations, talking to people directly.
For inspiration I rely on stock screeners that I run a few times a year. The output gives me a list of companies to look at and learn about.
I like to believe that validation comes from the market itself even though I have a few favorite public investors that I like to check from time to time: Lone Pine, D1 are two examples.
I also read and re-read some finance books like The Little Book That Still Beats the Market from Joel Greenblatt, some pages from the Intelligent Investor. Always a good refresher.
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