Investing like a GSAT kid

The Rigors

What does a child studying for GSAT exams and an investor have in common? Many persons would have serious difficulty answering that question. A GSAT student needs to be focused, long term oriented, diligent and have a strong sense of what they would like to achieve in the future. These children experience hours of extra classes to supplement full sessions of school and seemingly never-ending piles of homework which form an intense regime for this ruthless national intellectual showdown.

Out of a total of over 60 high schools, only 20 of these are deemed to be ‘Ivy League’ based on The Gleaner’s annual report for academic performance. Out of the 20 Ivy League schools, each student selects the top four or five schools that they personally favour. Each student will have different top five picks, using selection criteria that vary substantially. Some children may want to carry on a family tradition of going to a certain school, others may admire the alumni and academic prowess of the institution and others may simply be drawn to the school for other intuitive reasons. Regardless of choices made, all GSAT students understand that not all schools are created equal.

Investors and GSAT

Similarly, there are many companies out there which all have the same objective which is to maximize value for the shareholders. There are bad, good and great companies but a wise investor will analyze the atmosphere then select the special picks that are their personal “ivy league” companies. Financial statements, decisions by management, company history, brand strength and future prospects for the industry are tools that differentiate these firms.  Finally, the investor will pick from that “ivy league” batch and focus their efforts on those chosen companies. Investing like a GSAT kid creates a focused, paced, informed, purposeful approach to wealth creation.

Knowing your personal picks inside out from doing homework and being patiently consistent in building one’s holdings is a prudent and realistic approach to creating value for the long term sustainably.  These companies, in all their ‘greatness’ will have their good days and days that are not so great but if they come from that personal Ivy League list, built with the help of a licensed financial advisor and affirmed by one’s knowledge, research and intuition then the foundation is set for receiving reasonable returns on a consistent basis. Investing like GSAT kid is linked to the idea behind value investing, a philosophy that has built the wealth of Warren Buffet, Michael Lee Chin, Peter Lynch and possibly you in a matter of time.

By Julian Morrison

Julian is an Investment Advisor at the JMMB Group with experience in Insurance, Banking and Economics. He holds a Wealth Management and Financial planning certificate and another in Mergers and Acquisitions from the Jamaica Stock Exchange. Julian is also a member of the Jamaica Chamber of Commerce and takes a special interest in the development of Micro, Small and Medium Sized Enterprises (MSMEs) in the Caribbean.