Open For Business


Forget investing trends, and ignore the market’s twists and turns. That might seem like surprising advice coming from a financial planner, but Gerald Loftin stands behind it: “That’s where you get into trouble, because what you find is that you’re buying when you should be selling, and you’re selling when you should be buying.” Loftin runs his own financial advisory firm, Renaissance Financial Group in Norwood, Massachusetts, which has $42 million in assets under management. Loftin, who is also a licensed insurance and securities consultant, shared his investment philosophy.

Given the market’s recent fluctuations, from the big dip in February to its recent record highs, should investors worry that a correction may be in store?
I’m constantly teaching clients about the merits of why they want to take a long-term perspective. If it’s a good company, it’s going to be a good company whether the market’s down or up.

So, ignore the trends?
I try to ignore a lot of trends because they come and go. Here’s an example: Let’s look at “a day in the life.” Perhaps when you woke up this morning you put on shoes from DSW. You might have called into work on your Verizon cell phone because you had to stop for gas at Exxon. Then you got to your desk and “Googled” something.

If you’re buying quality companies–regardless of whether the Dow Jones industrial average is up 100 points or it’s down 1,000–the things that you’re going to do in your day are going to be no different from the other millions of people who are doing the same thing. Clients who blew out of their portfolios when the Dow plunged are now sitting on the sidelines wondering when is a good time to get back in. By the time they realize it’s a good time, they’re buying at a higher price.

I tend to be very methodical when it comes to buying companies: looking at how long the company’s been around, if it’s a growing industry, assessing its cash flows and price-to-earnings ratio, and also determining whether the company has run into money problems or legal problems.

With that said, I gather you would recommend DSW?
Why wouldn’t you like DSW Inc. (DSW)? It’s one of those companies that if the economy’s not doing well, then instead of going out to DSW and buying three pairs of shoes in one trip, someone may buy one pair. I’ve never shopped there, but I know a number of people who do, and why do they go there? Selection and price. There you go.

DSW is up 60% since going public in 2005, and in its last fiscal year earnings per share rose 48%. Analysts are projecting that DSW will average earnings growth of 20% a year for the next five years. Is that realistic?
The stock’s done very well. The only concern with DSW, which operates in 36 states, and what may hurt their stock is if for some reason people stop flooding the stores. Their growth is limited to how much saturation they’re


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