FAQ

Q: What is The Sizemore Investment Letter and how is it different from other financial newsletters?

A: The mission of The Sizemore Investment Letter is to give investors solid, actionable portfolio recommendations that should do well in any economic climate. We intend to do this by focusing on key themes:

  • Select growth-oriented investments that capitalize on durable, long-term macro trends. The themes that we intend to follow most closely are the rise of Generation Y (the “Echo Boomers”), the graying of the Baby Boomers, and the development of the urbanized middle class in emerging markets such as China, India and Brazil.
  • High-quality income investments that should continue to generate consistent returns in even the most volatile of markets.
  • Contrarian investments and trades that attempt to identify false trends and position portfolios accordingly—on the long or short side.

Q: What kinds of investments will The Sizemore Investment Letter recommend?

A: We will be recommending individual stocks and bonds where appropriate as well as ETFs and mutual funds. Other, more exotic investments such as preferred stock, real estate investment trusts (“REITs”), and master limited partnerships (“MLPs”) will also be considered when we consider them to be priced attractively.

Q: Do the ideas behind The Sizemore Investment Letter work?

A: Absolutely. Let’s start with the emphasis on income. In his excellent book Behavioural Investing, James Montier said that “Over the long term, dividend yield has provided over 50% of the total return to equities!”

And if dividends are reinvested, the numbers get even better. In his groundbreaking book The Future for Investors, Wharton professor Jeremy Siegel found that “From 1871 to 2003, 97 percent of the total after-inflation accumulation from stocks comes from reinvesting dividends. Only 3 percent comes from capital gains.”

Income investments can lose money, of course. Any investment can. But we firmly believe that a solid stream of income can mitigate the erratic booms and busts of the market over time and allow investors to generate a respectable return.

Academic studies also confirm that using demographics to identify growth investments is a winning strategy. In 2005, professors Stefano DellaVigna and Joshua Pollet published what we believe to be one of the most insightful academic papers in the history of academic finance: “Attention, Demographics, and the Stock Market” (available at the UC Berkley website: http://www.econ.berkeley.edu/~sdellavi/wp/attention.pdf).

DellaVigna and Pollet wrote, that “Cohort size fluctuations produce forecastable demand changes for age-sensitive sectors, such as toys, bicycles, beer, life insurance, and nursing homes. These demand changes are predictable once a specific cohort is born.”

Using this insight, the professors proved empirically that changes in demand based on demographic trends can add 5-10% in excess returns over the broader stock market.

So, we have based The Sizemore Investment Letter on methods that have been proven to be effective over the long term.