Method Investing – the Quentinvest Way

Many people regard the stock market with great suspicion. They see it as a quicksand where gullible innocents are parted from their money, usually in the direction of unscrupulous professionals.

A famous book about the stock market was entitled 'Where are the customers' yachts' which implied that stock brokers made a fortune but none of their customers did. Apparently the author was inspired to write the book when he was told that all the biggest boats in the harbour belonged to stock brokers.

For many years all the gains on unit trusts and other collective investments were absorbed by fees and commissions by managers who were mostly closet index trackers. This realisation gave birth to so-called passive (unmanaged) funds and the whole ETF movement.

Even if you could avoid all these pitfalls the stockmarket was still a quicksand for the unwary because of the collective tendency to take investment decisions based on emotions, which quickly translates into buy at the top, sell at the bottom and buy shares in all the worst companies because they look cheap and avoid the good ones because they look expensive.

Nobody was exempt. Even the supposed clever clogs who buy CFDs and make spread bets mostly lose money (75pc according to IG), very much like the clients of bookmakers. My step father was an eager client of the bookmaking fraternity and realised all might not be well when his bookmaker gave him a silver cutlery set for Christmas.

And yet amid all this carnage one man with plenty of common sense, Warren Buffett, has been investing since the last war and has piled up one of the world's great fortunes. And how has he done it. According to him by buying shares in excellent growth companies and hanging on to them.

Surely we can do that which brings me to the Quentinvest method.