Jason Burack

Investor, Entrepreneur, Financial Historian, Austrian School Economist & Contrarian

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My Investment Philosophy

My investing philosophy is a mix of a handful of different ones. All of these different pieces to a puzzle that I have put together in the last 2 yrs. Each piece is important, but all by itself, it does not mean much. First and foremost though, I’m a value investor. I look for value in everything in my life including stocks, consumer goods, etc.

I have stated before that I don’t believe in listening to just one investor completely. Although, I used to only like Warren Buffett. But, that was when I was a newbie and not as exposed to other investors as I am now. Now, I’ve listened to hundreds of interviews from different investors, traders, read thousands of articles and a good amount of books so I have a much better idea of exactly what else is out there besides Warren Buffett.

So here’s my best explanation of my investing style. I start off with an Austrian Economist’s macroeconomic view of the markets. Don’t know what Austrian Economics is? Checkout the Mises Institute’s website. Think Peter Schiff, Dr. Marc Faber, Jim Rogers and George Soros. Those are just some of the famous investors who use Austrian Economics to their advantage. It is a unique and also contrarian view/perspective of the markets.

Austrian economics allows me to get a great macro or “top down” view/approach that is different from many others. Using macroeconomics is considered very, very rare, unusual and unnecessary for value investors like Warren Buffett and others.

But, I think it is necessary to use macroeconomics given the constantly changing world economic conditions and also the constantly changing rules, laws and decisions made by the US federal government, the Federal Reserve as well as other world governments. To paraphrase Rich Dad Poor Dad author Robert Kiyosaki in his new book Conspiracy of the Rich, The 8 New Rules of Money, ”The rules of money are constantly changing” and that’s why I think using macroeconomics is most important now.

Understanding the macro picture well also keeps me alert to changes so I figure out quickly if I am wrong.

Next, I add in Jim Jubak’s combination of top down then bottom up approach. In layman’s terms, that means that after I understand the larger economic picture and how I think it will play out I look for the asset classes (stocks, bonds, precious metals, etc) I think will do best in that climate. I then go into those sectors and apply fundamental analysis (think Warren Buffett) on specific companies to see how undervalued they are.

Besides looking for extremely undervalued companies, I am also looking for companies with good growth potential! I am greedy and I want value AND growth in the same stock. The trick is to figure out how to value a company in a certain type of sector. You CANNOT value say a mining company the same as a tobacco company or a technology company or a bank. That’s the toughest thing about value investing and fundamental analysis. It’s figuring out how to correctly value businesses differently from one another. Many investors don’t get it and because of this fact, they won’t ever get top returns that exceed the market.

The goal of going in there and trying to value the companies is to try and buy low and sell high as many times as possible. The best investors all figure out how they can buy assets for pennies on the dollar. That’s what I am looking to do consistently.

I pay attention to the charts and to the technicals or TA (Technical Analysis). But, there are too many headfakes now going on with TA. I discount the technicals heavily because of the false positives that are coming out. I prefer the fundamentals. I know them stone cold, forwards, backwards and sideways! The fundamentals are much, much less likely to lie than the technicals. Especially when companies like Goldman Sachs and others can intentionally manipulate the technicals and the charts…

When I am looking for companies with good growth prospects, I also like paying attention to Louis Navellier.

Besides stocks and commodities, I like to trade some options around my core long term positions. I believe options are a great supplement to stocks and commodities and they help you make extra money on the side and/or provide your portfolio with downside insurance. As of now, I mostly just sell covered calls and buy them back. Sometimes I will repeat this process a few times a month depending on how much time I have to spend paying attention to the everyday price fluctuations of stocks and studying stock charts and other technicals.

That’s all the options trading I do for now. I have been successfully trading options for well over a yr now! Options work very, very well with commodity stocks because of the inherent volatility of commodities. I can take advantage of the volatility and make extra money.

Just some of the other investors I study and follow are: Peter Lynch, Charlie Munger, Jim Paplava, Peter Schiff, John Paulson, Philip Fisher, David Einhorn, Eric Sprott, John Embry, Peter Grandich, Dr. Marc Faber and Dr. Stephen Leeb.

  • Study economics, macroeconomics and the most powerful long term trends in the world
  • Study great investors, NOT theories!
  • Study case studies of companies and try to explain in your own words an analysis of what the company did right or wrong in a given situation.
  • Spend time studying companies, their investor presentations AND LISTENING to conference calls and interviews with the key executives at companies INSTEAD of theories and you will put the odds of success in your favor as an investor!

It sounds counter intuitive to what you will learn in business schools, but you should not take as gospel everything you learn in business schools and this investing philosophy does indeed work in practice out here in the real world!

It’s about learning to manage and understanding risk, accurately calculating the risk/reward ratio of success before you risk any money and then making a decision of if the juice is worth the squeeze or is the risk worth the reward and vice versa?

If you can accomplish all of this, you should put the odds of success in your favor!