Episode 409: What to Do When the Market Punches You in the Face
On this week's Stansberry Investor Hour, Dan and Corey welcome Chris Mayer back to the show. Chris is co-founder and portfolio manager of Woodlock House Family Capital – a firm that focuses on long-term, patient investing. He has also written several books, including 100 Baggers: Stocks That Return 100-to-1 and How to Find Them.
Chris kicks things off by breaking down his "CODE" acronym that he uses for picking stocks – cheap, owner operator, disclosures, and excellent financial condition. He lists Brown & Brown as an example of one such company that checks all four boxes. And he shares a trucking company he likes because of its lower-than-average turnover rate. This leads to a conversation about the importance of management having skin in the game and why investors should mostly leave their portfolios alone. Chris then uses Monster Beverage as a case study for identifying a good company. He notes...
You had years to buy it and still make a hundred times your money. And it was evident in the financials... You saw very large, fat margins [and] big growth. And it was years that [it] was going along like this. So you had a chance to buy it during all that time. It was like right out there in the open... So the lesson there is when you find a really great business, you have a lot more time than you think.
Next, Chris talks about investor psychology. He says that it's difficult to hold stocks through large drawdowns and through periods of boredom, but that's how you can make a lot of money in the long term. Doing nothing is often the best thing you can do for your portfolio. Chris also covers how philosophy has influenced his investing style, the hidden opportunity in Swedish stocks, two specific Swedish companies that he likes today, and why you should always stick to your core principles – even if it means missing some winners along the way...
There's tens of thousands of securities. We have to have some way to get to some manageable number that we can work on. And so you have to also recognize that whatever principles you choose or filters you choose, you're going to miss out on some great winners.
Finally, Chris explains that staying true to your investment principles is hardest (yet also most crucial) when times get tough. It all comes down to knowing yourself, your risk tolerance, and what you're most comfortable investing in. Chris shares the names of two spun-off companies he's excited about today, as he expects a big surge in free cash flow for both. He clarifies that these are for holding long term rather than trying to make a quick buck. And Chris finishes with a discussion about why the recent tariff drama doesn't really matter...
It doesn't change anything that I'm doing... I'm not going to run out and sell any of these businesses because they're down 15% – or whatever it is – from their highs.
Click here or on the image below to watch the video interview with Chris right now. For the full audio episode, click here.
(Additional past episodes are located here.)
The transcript is coming soon.
This Week's Guest
Chris Mayer is portfolio manager of the Woodlock House Family Capital fund. He co-founded the firm in October 2018. Chris got his start in finance in 1994 as a corporate lender, a role he held for 10 years. After that, he wrote investment newsletters for Agora Financial and worked with Bonner & Partners. Chris has been quoted many times by MarketWatch, has contributed to the Washington Post, has made multiple CNBC and radio appearances, and has been a guest on Forbes on Fox, Fox Business, CNN Radio, and Russia Today TV.
Chris is also a prolific author. His books include Invest Like a Dealmaker: Secrets From a Former Banking Insider, 100 Baggers: Stocks that Return 100-to-1 and How to Find Them, and How Do You Know?: A Guide to Thinking Clearly About Wall Street, Investing, & Life – among others. Chris graduated magna cum laude with a degree in finance from the University of Maryland. He also has a Master of Business Administration from the same institution.