Thayer Tutt, Jr., president and chief investment officer of El Pomar Foundation, has the monumental job of managing the portfolio of the foundation’s $450 million endowment. While he works in a business that requires constant change, there are a few principles that Tutt applies in any investment situation.
In addition to his El Pomar service, Tutt aids a number of charitable organizations in Colorado Springs. He uses his expertise to advise a dozen additional organizations through service on various boards and committees. A few of these institutions include the United States Olympic Foundation, Colorado Springs World Arena, Colorado Springs Fine Arts Center, Cheyenne Mountain Zoo, and Penrose St. Francis Hospital. He additionally extends his advice to young leaders through his Investment Challenge class for El Pomar Fellows, and most recently to Colorado College students.
For the past several years, Tutt has been invited to speak to Allan Roth’s investment class at Colorado College. Tutt presents on El Pomar Foundation’s asset allocation and strategy focus. The course concludes with students presenting their recommended changes to improve Colorado College’s investment portfolio. Tutt and three other judges listen to the students’ presentations and evaluate them on accuracy, clarity, and investment fundamentals. As part of his involvement in the course, he also presents the top lessons he has learned in 28 years of investing:
1. Mistakes are expected, but disasters must be avoided – an investment manager is defined by his mistakes.
2. Never fall in love with a company.
3. Dividends are an important component of return. Since 1930, 44% of the total return for stocks (S&P 500) came from dividends.
4. Diversification is not necessarily a good thing. Pay more attention to non-correlated asset classes.
5. Seek the lowest fees possible.
6. The stock market can be a dangerous place to invest – valuation (price) is key.
7. There is no optimal portfolio – the goals of each client should dictate portfolio construction.
8. Revision to the mean is a very powerful concept. Over/under valuation in asset classes will impact long-term returns.
9. Momentum investing or following the crowd can turn a trend into a bubble very quickly.