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Wall Street Transcript Interviews with Manager Steve Selengut - Part 5

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TWST: And what are your clients talking to you about these days? What are their concerns and expectations on the market?
Mr. Selengut: Generally, they don’t contact me a whole lot, although I have received a lot of “thank you”s over the last year or so. It’s just that they’re glad that I stuck to my conservative guns and didn’t get involved in the speculative fever that backfired in their friends’ faces. But other than that, close to retirement, I’ll have somebody who’ll want to come in for a meeting and see when we want to start changing an allocation. I don’t get a whole lot of talk because we set up a defined program right from the beginning, and it doesn’t vary. There are no surprises. They know exactly the types of securities I’m going to be in and why they’ve been purchased. They know I’m going to sell a stock as soon as I’ve made a good profit, they know that there’s going to be a lot of income generated in the portfolio. They know that I’m going to keep 70% Equity, or a 60% Fixed Income allocation, so there’s not a whole lot to change unless something happens in their lives. Then we make appropriate and gradual changes. Rarely does a change need to take place overnight. It takes place over a period of time.

I had a guy recently who called me who said his partner was going to need a sum of cash from the portfolio I manage for them. And he told me that it would probably be needed in a period of two months and he knew that I’d probably generate that kind of cash flow thought trading. “But don’t reinvest it because you’re going to have to take it out.” So that’s the type of dialogue I have. They know what I’m going to do, they know how it produces, they know what the transactions are going to be, and they let me know if there’s going to be a change in direction, or if they need some cash. They call if they are going to be putting in money also. So I don’t have conversations which are addressing other issues: “What’s going to happen if we go to full-fledged war? What’s going to happen if we have another terrorist attack? What’s going to happen if unemployment gets into the double digits?” We don’t have those kinds of conversations because they pretty much know how I’m going to react.

TWST: Is there anything that you would like to add, to sum up the competitive strengths?
Mr. Selengut: First of all, investing is not a competitive event. It is a goal oriented, managed exercise. I think what I’d like to add is something that I think this interview should emphasize. This is the fact that a very conservative approach (although very active and based on somewhat boring parameters) has, over a 25-year span, outperformed any other type of approach out there. And in the past three or four years, where we had a spectacular rise in things called averages and indexes, and then a spectacular fall, this particular strategy has not only kept my accounts whole, but has pushed them to all-time high profit levels. I think that this is really news!

I don’t think you will find too many other Investment Managers, no matter how big or well respected they are, that could honestly tell a similar story. I’ve written a series of books that really explain to people how this can be done by anybody. All that they need to do is to develop a disciplined approach to managing their money, and apply it consistently. They can do it themselves. I’ve put it all in writing and I think it’s a big story that I can’t afford to advertise like a Morgan Stanley, a Prudential, or a Merrill Lynch.

I know that I’ll never get any Street recognition, certainly. I don’t really want it that bad, and I would never become one of “their” managers. But I would hope that The Wall Street Transcript or some other publication that is trying to inform the public would certainly spread this news around. I have a four part series I call “The Investor’s Creed”, and I’d like to end with the title paragraph:

“THE INVESTOR’S CREED”

“My intention is to be fully invested in accordance with my planned equity/fixed income asset allocation. On the other hand, every security I own is for sale, and every security I own generates some form of cash flow that cannot be reinvested immediately. I am happy when my cash position is nearly 0% because all of my money is then working as hard as it possibly can to meet my objectives. But, I am ecstatic when my cash position approaches 100% because that means I’ve sold everything at a profit, and that I am in a position to take advantage of any new investment opportunities (that fit my guidelines) as soon as I become aware of them.”

TWST: Thank you.

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