Sunday, June 18th, 2006
Driehaus remains true to style in tough times
The recent market volatility is tough on growth investors. But in times like this it’s constructive to review the methods of great investors’ and remember; it’s what happens in the long term that matters. Market downturns are particularly punishing on aggressive growth investors, with high PE stocks sold off sharply. Richard Driehaus is one of the most successful aggressive growth practitioners, producing compound annual returns to rival the greats such as Buffett and Lynch. Driehaus rejects the value approach and dubs his method ‘unconventional’. He rejects cliches such as ‘buy low and sell high’ and ‘don’t try to hit home runs’.
Driehaus’ buy method is based on finding shares in companies showing high and accelerating earnings that produce profits surprises. But he doesn’t just focus on fundamentals, the stocks must be acting well with superior relative strength. Stocks are offloaded under his sell method when earnings growth slows, or when technical action deteriorates such as stalling prices, a big correction or poor relative strength.
Driehaus, who suffered big drawdowns in the 1970s and early 2000s, cuts his losses on underperforming stocks. But importantly, he remains true to his style, even in tough times.
Word Count: 185. This entry was posted on Sunday, June 18th, 2006 at 7:58 pm and is filed under Aggressive Growth, Methods, People, Richard Driehaus. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
