A private investor’s story - The Globe and Mail

George Stockus

Occupation

Private investor

The portfolio

Holdings include cash and small short positions on stock-market indexes

The investor

George Stockus worked in the investment industry from 1984 to 2002. Bond trading and institutional sales were his specialties. Then he left to spend more time with family and to invest his own account, a move made possible by the gains earned from short selling software and telecom stocks near the end of the technology bubble of the late 1990s.

How he invests

Prior to shorting tech stocks, Mr. Stockus was a conservative investor "with a smattering of blue-chip stocks and bonds." He learned the lessons of balanced asset allocation firsthand during the 1987 stock-market crash when losses on the equity side were offset by "a massive rally in bond prices."

He remains a believer in long-term, buy-and-hold portfolios, for the most part. But he also searches for macro themes and will position more aggressively when "the environment is opportune."

In the mid-2000s, he spent a great deal of time studying the U.S. housing and lending markets. "You could see that America and leverage was a financial accident waiting to happen," Mr. Stockus observes. "I was short a select list of financial stocks."

But he was early, which "can be just as bad as being wrong." Financial stocks kept going up a lot more than anticipated. "I wasn't hurt by the crisis but I didn't make much from quite a lot of effort," he discloses.

Being a private investor is not easy, Mr. Stockus has found. But it allowed him "to be there to raise a family." Now that his childrendaughter and son (who needed several critical surgeries after birth) are on their own, Mr. Stockus is considering additional ventures outside of the home.

Best move

Shorting the tech bubble in 2000 and catching the energy rally in subsequent years.

Worst move

Shorting financial stocks too early in the mid-2000s on the back of much conviction – it was a lesson in "getting too dogmatic." Also, he saw that there is more to investing than generating good ideas, such as how you execute your trade and manage risk(such as cutting losses early)are just as important.

Advice

Mr. Stockus continues to research investment themes (those interested can visit beatlesonbanking.com). Of note, he is currently "very cautious" on the length and valuation of the bull market in stocks – as well as debt headwinds in the economy. "Central bankers seem to have steered us into another corner," he declares. "I expect … leaner years."

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