|
The following is
the text of an interview with The Charleston Regional Business Journal conducted
way back in February 2003.
|
Local investment manager
bucks Wall Street convention
By
Dennis Quick, Senior Staff Writer
Steve
Selengut, owner of Johns Island-based investment management firm Sanco
Services Inc. (www.sancoservices.com), claims that when it comes to making
money for clients, Wall Street investment firms can’t touch him. In fact,
few investment managers can, he says.
“During
the past three years, all of my clients’ portfolios have seen positive
performances,” he claims, maintaining that portfolio gains for his clients
averaged 28.4% between November 1999 and November 2002. “Not one of my
clients has had negative results during that period.”
[Selengut,
who manages more than 90 portfolios, supports his claim by showing his
clients’ financial statements.
[NOTE: CRBJ Staff Writer Dennis Quick examined the client statements personally.]
“If
Merrill Lynch or Morgan Stanley had my track record, they’d promote it,”
Selengut says, noting that, for all of Wall Street’s advertising, few
investment firms advertise the amount of money their brokers have made for
their clients.
Selengut
began his investment career in 1970 at age 25. Nine years later he was able to
retire from his pension investment management job at a life insurance company
and start Sanco Services in New Jersey. Last summer he moved his business to
Johns Island.
Selengut
attributes his success to investing only in high-quality, low-risk, well-known
companies like AFLAC, ALLTEL, American Express, Bank of New York and
BellSouth, whose stocks are rated “B-plus” or above by Standard and
Poor’s Corp. He buys stocks when their values are low, sells when their
values are high and takes the profits. He doesn’t hold on to
“winning” stocks whose values appear to be on a continuous rise. What goes
up in price eventually comes down—sometimes suddenly and drastically—and
Selengut believes it’s smarter to take the profits while they’re there to
be taken.
“Profit
taking is a management or business decision,” Selengut says. “It is not an
attempt at timing or an effort to predict the future. Profit taking throttles
greed and protects wealth. The problem with most investment strategies is that
they’re based on the premise that the future direction of the market is
predictable. It isn’t.”
Selengut
says another key to his success is that he avoids mutual funds, which consist
of a variety of stocks purchased by a group of shareholders. According to
Selengut, mutual funds rarely offer high-quality stocks. Also, he
shuns investment products like retirement plans, funds and other
such ready-made offerings.
“The
reason for this is that I belong to the old fashioned school of investing that
considers portfolio design, development and management a very personal
exercise,” he explains. “How can a packaged
product be right for thousands, even millions of people?”
In
his book, The Brainwashing of the American
Investor, Selengut advises investors to steer clear of the
“get-rich-quick mentality” he says is promoted by Wall Street. He
emphasizes that investing requires discipline, patience and risk management
and is not to be confused with stock market speculating.
“Portfolio
management is the effort to achieve personal goals and objectives using a
stable strategy,” he says. “Speculation, on the other hand, is a
‘lottery-esque’ approach that seeks a shortcut to the objective while
introducing excessive risk in the process.”
Selengut’s
rules for successful investing are simple. Because risk is part of investing
and can’t be avoided, don’t risk what you can’t afford to lose. Invest
in quality stocks, trade them aggressively and take advantage of a volatile
market because it provides investment opportunities. And keep a diversified
portfolio.
“Diversification
is not just the presence of many different names, products, countries and
industries,” he notes. “Rather, it is a manageable portfolio of
purpose-directed investments, each of which can stand on its own merits as a
profitable venture.”
All
of this is a part of Selengut’s “plain vanilla management”
guidelines—an investment roadmap he claims makes the journey to greater
wealth more rewarding.
