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  • Roshan Loungani

My Investment Journey

I started in the financial services industry in 2000 as a Financial Advisor. Prior to that, I spent 2 years working part time as either an intern or assistant in the industry. Having tried, monitored or observed numerous methodologies for investment management, one thing I know for certain is that investing is not a science. There is no magic formula for investing, even though famous investor Joel Greenblatt tried to create one. There are a lot of ways to both make and lose money, quickly or slowly.


When I started, our economy was at the peak of the Tech bubble We were using software to devise a target asset allocation based on Modern Portfolio Theory. I was working with clients, felt great about the advice I was giving them, then the market crashed. I immediately started studying different methodologies that would better protect my clients.


I tried rotating in and out of the top sectors on a quarterly basis. This was a lot of work, involving a lot of transactions, but not more successful than investing in the S&P 500.

A few years after the market crashed in 2008, I tried a high yield market neutral strategy. This strategy consists of investing half the assets in high yield stocks and bonds, while investing the other half in a fund designed to be profitable during market declines. This lost money in two ways: the high yield bonds lost, and the market would profit if the market went down lost money as the market went up. <reword this…. not sure what you’re trying to convey.


I tried using Modern Portfolio Theory and a Monte Carlo Optimization. This was successful when the market went up, but had the same issues as Modern Portfolio Theory, on its own, when the market went down.

I decided to try to emulate Warren Buffett’s strategy and select stocks that were undervalued. However, finding these stocks were extremely difficult and time consuming. This worked well until 2012 when the market appeared to be overvalued. Had we stayed in cash because I could not find undervalued stocks, we would have missed four years of double-digit market returns. Buffet, himself, encouraging people to invest in the S&P 500 won a million-dollar bet for charity. He bet the S&P 500 would outperform a basket of hedge funds from 2007-2017 and he was right.


I tried investing in real estate and from 2009 – 2012 it did very well. But as banks started lending more and individual investors came back to real estate the opportunities, we were looking for dried up.

I have tried investing in non-publicly traded funds. Some funds would invest in real estate and others would lend money to businesses. Some did well, some did not. Overall, they did not do as well as expected.


I tried investing in options and quickly learned the perils of leverage. This almost cost me my career. I ended up losing a significant amount of money for myself and my clients, g receiving multiple customer complaints. I never had a client complain before this or about anything else. The risk here is so great that I would advise you to move very cautiously in this space.


There are a number of other approaches that I have tried with varying success including business cycle valuation, Greenblatt’s Magic Formula, trying to emulate Peter Lynch, David Swensen, Ray Dalio and several other famous investors. What I have learned is that there are many methods to investing successfully. Finding which ones are right for you based on your comfort level, experiences and temperament are important. Finally, do not put yourself in a position where you can be crushed by being wrong about one investment. There are a lot more opportunities to come, make sure you are able to take advantage of them.

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© 2018 by Roshan Loungani, CFP®, CRPC®.  Vienna, Virginia

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