A Disciplined Approach to Investing: The Power of Patience
At Rowan Street, we’re proud to report a strong third quarter, with a net return of +12.8%. This brings our year-to-date net return to +42.3%, outperforming the S&P 500’s +22% return. Our trailing 12-month net return is +72%, compared to the S&P 500’s +36.3%.
The Importance of Selectivity
We believe that success in investing isn’t about how many swings you take, but about making sure the swings you do take truly count over time. This philosophy is inspired by Warren Buffett’s concept of the “20-punchcard,” which emphasizes the importance of waiting for the perfect pitch before making an investment decision.
A Guiding Principle: Comfortable Doing Nothing
One of our guiding principles is to be comfortable doing nothing until there is something truly worthwhile to do. We believe that activity is the enemy of returns, and we spend our time reading, thinking, and not acting impulsively. As Blaise Pascal said, “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.”
A Focused Portfolio
Our portfolio consists of 8 core positions, along with a few smaller, emerging ones we’re studying closely. If we stick to the 20-punchcard philosophy, we’ve only got 12 more decisions to make over the next 20-25 years. This forces us to think deeply before letting any new position into our portfolio.
The Power of Compounding
We believe that our approach – fewer, but higher-quality decisions that fit right in our sweet spot, held over long periods – is the most effective way to build lasting wealth and fully harness the power of compounding.
Conclusion
As always, it’s a privilege to manage your capital, and we sincerely appreciate the trust and confidence you’ve placed in us. We look forward to updating you again at the end of the year, and we are always around if you would like to chat.
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