While this article was written pre-pandemic, the tenets are even more of interest during 2020's turbulent markets. We are proud to be one of the funds mentioned herein.
Long-term investing is our conviction, yet we are always attentive to appropriate opportunities to add to or trim our holdings if necessary. In this article, the author discusses these ideas:
- Move up, not out - instead of slashing holdings, the suggestion is to replace them with others that are potentially more resilient.
- Check the price tag - monitoring the P/E ratio of holdings in portfolios to ensure they are in line with their peers
- Weed the garden - consider trimming holdings that have grown rapidly to monitor exposure in any one sector
- Divesify the defense - be careful of following the crowd into "defensive stocks," which as a result of a big flight of investors may make them overvalued. Consider paying an active manager for their expertise.
Note this article requires a subscription to The Wall Street Journal online.
The statements and opinions are those of the author as of the date of this report. All information is historical and not indicative of future results and subject to change.
The Mairs & Power Funds are designed for long-term investors. Equity investments are subject to market fluctuations and the Funds' share prices can fall because of weakness in the broad market, a particular industry or specific holdings. Investments in small and midcap companies generally are more volatile. International investing risks include among others political, social or economic instability, difficulty in predicting international trade patterns, taxation, and foreign trading practices and greater fluctuations in price than U.S. corporations.
P/E ratio, price-to-earnings ratio is the ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple.
S&P 500 TR Index is an unmanaged index of 500 common stocks that is generally considered representative of the U.S. stock market. It tracks both the capital gains of a group of stocks over time and assumes that any cash distributions, such as dividends, are reinvested back into the index.
It is not possible to invest directly in an index.
Diversification does not eliminate the risk of experiencing investment losses.
Mairs & Power Growth Fund expense ratio as of 6/30/2020 is 0.65%.