4 Growth portfolios
This chapter covers
- What is an investment thesis to predict growth companies?
- How do you create a portfolio that reflects an investment thesis?
- How do you find specific assets that reflect your thesis for your portfolio?
- How do you decide to take the required risks to pursue potential gains?
This chapter explores the process of building an asset portfolio designed to outperform the market. Finding these winners, or alphas as they are often called, is the holy grail of investing. A stock picker who consistently is just slightly more right than wrong may have already gained Midas’ touch.
Many investors distinguish between gambling and investing when making decisions about trading assets. We are excited about potential investment ideas that could make us wealthy. And as these dreams of joining the club of Warren Buffett are overly pleasant, we tend to downplay doubts that threaten to undermine this endearing feeling of getting rich soon. Gambling begins when we rely more on feelings than on critical thinking when making investment decisions. With only a little research, we find suitable candidates for investments. The tricky part is conducting the required deep research to identify those candidates for an investment that truly yield a return.