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Charleston Regional Business Journal Interviews with Manager Steve Selengut
*** Financial Website Warning Label: Please Read Me ***
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.