Garrett Investments

Core philosophies

The Foundation: Deep Dislocation and Fundamental Value: My long term investing strategy centers on identifying deep dislocation between a company’s underlying business fundamentals and its prevailing market price. I focus on buying high quality, financially sound companies during periods of extreme market fear, negative sentiment, or temporary narrative shifts.

I rarely chase stocks running at all time highs or those that have surged hundreds of percent in a compressed timeframe. Instead, my ideal entry point for a long term core holding is near the 200 day Simple Moving Average (SMA). I look for discounts, but I also do not count out stocks that have consolidated for a period of time while the company continues to compound earnings. This is what I look at as building a base. A company can run ahead of its valuation, so it needs time to grow into that before running higher. This period offers a valuable window to analyze a good stock and wait until the projections make sense with the valuation. When a fundamentally sound company pulls back to this critical technical level due to macro noise or indiscriminate sector wide selling, it almost always presents an asymmetric risk to reward ratio. I wait for the market to bring the pitch to me. When the broader market panics, I anchor my decisions in the underlying math of the business. My process involves dissecting recent earnings reports to compare how the company is actually operating versus how its stock price is behaving. I look for a track record of flawless execution, companies that consistently beat EPS and revenue estimates quarter after quarter. Once I identify a pricing disconnect, I break down the prevailing bear case to understand exactly why the market is wrong, allowing me to formulate a solid, data-backed thesis for the future.

A massive part of my philosophy is entirely psychological: separating emotions from execution. It is incredibly easy to see a stock turn red and want to panic sell just because you do not want to lose money. But it is equally dangerous, if not more so, to sell your winners too early. Cutting winners short is a critical mistake I have made in the past, and it is something I actively work against now. This is exactly why I am still holding Advanced Micro Devices even with so much in unrealized gains. When you let emotions drive, you sell when you are scared or when you just want to lock in a quick profit. When you let the data drive, you hold. I force myself to focus on the math, the underlying fundamentals, the long term vision of the future, management commentary, and broader market dynamics. If the thesis is intact and the math still points to growth, I hold, regardless of the daily price action.

A critical, yet often overlooked, component of my analysis is the leadership team. I dig into the management structure to determine if they possess the qualifications, capital allocation skills, and strategic vision to navigate future headwinds. Beyond the C-suite, I evaluate corporate culture and employee satisfaction, knowing that strong internal alignment and morale are leading indicators of long-term external outperformance.

Thesis Driven Outperformance:

This discipline of waiting for the right technical setup, analyzing the fundamentals, and buying top tier companies at a discount has been the primary driver of my portfolio’s outperformance. I look past short term price fluctuations that crowd emotions and push people out of stocks. Here is how this framework applies to my core positions:

Advanced Micro Devices (AMD): This has been my most successful investment to date, testing every aspect of my emotional discipline. When the stock was trading roughly 40 to 60 percent below its all time highs, market sentiment was entirely toxic. Critics were literally calling it “Advanced Money Destroyer.” I started building my position around the 120 area and ruthlessly averaged down to the high 70s. I blocked out the constant noise by listening directly to Lisa Su. Her roadmap for the future, the company’s expanding margins, and the critical importance of their chips in AI inference gave me absolute conviction. By trusting the data and execution over the fear, I built a massive position that ultimately captured over 400 percent upside. I continue to hold it today despite the massive unrealized gains, letting the fundamental thesis run rather than cutting a winner short out of emotion.

Alphabet (GOOGL): This is a perfect example of capitalizing on pure narrative panic. When the generative AI wave hit and people genuinely believed ChatGPT was going to crush Google Search, followed closely by the DOJ actively pushing to force a sale of Chrome, the market priced Alphabet as if its core business was going to vanish overnight. As an investor, you have to acknowledge real risks, and shifting consumer search habits combined with aggressive antitrust regulations are genuine headwinds. But the market wildly overreacted, creating a massive dislocation. I already owned the stock, but as the price collapsed under the weight of these apocalyptic headlines, I broke down the bear case and saw that the math simply did not align with the fear. Wall Street was completely ignoring Google Cloud’s accelerating profitability, YouTube’s absolute dominance in consumer attention, and the reality that Alphabet has the deepest data infrastructure and capital on the planet to build out its own AI ecosystem. Instead of letting the noise shake me out of a winner, I took advantage of the extreme discount and added heavily to my position. I trusted the underlying fundamentals over the sensationalized news cycle, making it one of my largest core holdings. The ensuing 150 percent upside proved that entrenched, cash flow generating powerhouses rarely die as fast as the market predicts, and buying the fear is how you generate real alpha.

Palo Alto Networks (PANW) and CrowdStrike (CRWD): When the market broadly dumped software stocks, the prevailing bear case was driven by absolute fear that generative AI and autonomous coding agents were going to completely disrupt the cybersecurity industry. The market was pricing in a future where AI would replace security analysts and make external monitoring platforms redundant, leading to a massive sector wide panic. However, I saw a profound misunderstanding of how cybersecurity actually scales in the enterprise. PANW initially caught my attention because of its flawless execution, having beaten EPS and revenue estimates for over twenty consecutive quarters. You do not accidentally achieve that kind of consistency. When the market panic set in, I looked at the math and realized the demand for platformization and consolidated security was actually accelerating, not dying. I stepped into both of these names during peak sector fear. Buying unyielding execution when the broader market is indiscriminately selling is a cornerstone of my strategy, and it paid off immensely as the market realized cybersecurity is more essential than ever.

E.l.f. Beauty (ELF): This is a prime example of knowing your holdings intimately and actively managing your cost basis. I owned ELF for over a year and a half, watching the fundamental story and market share growth unfold. Then, the stock experienced a severe drawdown into the 50 to 60 dollar range. The market was pricing in fears over tariff driven margin compression, softer than expected sales from a recent acquisition, and a broader narrative that mass beauty demand was slowing down. It would have been incredibly easy to panic sell alongside the crowd. Instead, I broke down the data and saw that their underlying business momentum, brand loyalty, and market share expansion were still completely intact. The fear was a temporary narrative shift, not a fundamental broken thesis. Because I knew exactly what I held, I aggressively added to the position during the absolute worst of the selling. This conviction significantly lowered my cost basis and positioned me perfectly for the massive recent rebound, producing fantastic returns. It is definitive proof that when you know exactly what you own, red days are opportunities to accumulate, not threats to run from.

Shopify (SHOP): Following the massive 2021 hype cycle, Shopify was decimated. The market was pricing in a brutal post pandemic e commerce hangover, rising inflation, and slowing revenue growth. Investors were fleeing the stock, treating it like a temporary lockdown fad rather than a sustainable business. But when I looked past the noise and broke down the financials, the underlying business was not broken. I saw the enduring opportunity in their commerce infrastructure and recognized that they had quietly become the irreplaceable backbone for independent retail globally. I did not rush in to catch the falling knife. Instead, I patiently waited for the stock to base and consolidate. Once the company’s future projections finally aligned with its new, much lower valuation, I built my position. The fundamentals ultimately drove the stock back up as the market remembered its dominance in the space.

Amazon (AMZN) and Meta (META): These are classic examples of accumulating world class businesses when the market momentarily hates them. During periods of intense pessimism, the broader market priced these titans as if their core business models were structurally broken. For Meta, the market was heavily penalizing their massive cash burn in the metaverse, assuming the core advertising engine was dead. For Amazon, Wall Street was hyper focused on the post pandemic e commerce slowdown and the massive logistics overbuild. The disruption risks being priced in were apocalyptic. But by analyzing the underlying fundamentals and their massive cash flows, I saw a blatant disconnect. I realized these companies were actively returning to operational efficiency while maintaining absolute dominance in their respective sectors. Buying these giants at generational discounts allowed me to capture the massive upside as the market finally recognized its mistake and the fundamentals overpowered the fear.

These examples are just a few of many stocks showing how waiting for dislocation and trusting the fundamentals over emotions drives massive outperformance in my portfolio. Looking ahead, my current highest conviction pick is ServiceNow. I will be breaking down exactly why its unmatched platform stickiness, durable enterprise workflow dominance, and expanding margins make it my top thesis in my very first upcoming report.

Projections and Valuation Math: I rely heavily on running the numbers to see where a company will be in the future. Currently, I use platforms like 1000xstocks and Qualtrim to run these models, and I am in the process of building my own proprietary projection model. My valuation process often involves modeling revenue and EPS growth while assigning a sensible future P/E multiple. Depending on the specific business model, I will also pivot to evaluating Price to Book (P/B) or Price to Operating Cash Flow (P/OCF) when those metrics provide a clearer picture of intrinsic value. I hold these high-conviction positions for the long term—only exiting when my core investment thesis fundamentally breaks or the mathematical projections no longer justify the hold. I will dive more into these projections when I start writing thesis.

Sector Allocation: Tech Heavy with Resilient Diversification:

While a significant portion of my portfolio sits in technology and semiconductors, this is not a result of blind sector loyalty. The reality is simple: technology is the sector I follow most closely every single day. Because I track it so deeply, it is naturally where I spot pricing dislocations and mispriced pitches most frequently. When the market throws an irrational selloff at a world class tech company, I act. However, I am acutely aware of the risks that come with a tech heavy concentration. Operating with a higher beta relative to the broader market means my portfolio can experience amplified volatility during market pullbacks. A sharp sector rotation or a macro growth scare can hit tech hard, and I am constantly thinking about how to protect my capital against those major drawdown periods. I fully respect the power of diversification, and I know that true long term wealth preservation requires balance across different economic drivers. Because of this, I am actively and aggressively searching for high quality opportunities outside of tech to add to heavily. I do not diversify just for the sake of owning more tickers. I look for non tech businesses that possess the exact same traits I demand in software or chips: entrenched market moats, incredible pricing power, flawless execution, and sticky revenue models. High conviction positions in companies like Linde, S&P Global and Mastercard serve as crucial anchors for my capital. They provide structural stability, lower my overall portfolio beta, and generate resilient cash flows regardless of what the tech sector is doing. Managing risk means constantly evaluating where the portfolio is vulnerable, and expanding into top tier industrial, financial, and consumer businesses remains a top priority as I allocate new capital.

As a direct extension of this risk management framework, I maintain a dedicated defensive allocation in the 20+ Year Treasury Bond ETF(TLT) at roughly a 10 percent portfolio weighting. While my equity selection focuses heavily on growth, keeping a bond allocation provides essential structural balance, lowers overall volatility, and acts as a safe haven hedge against a broader recessionary shock. More importantly, this position functions as strategic dry powder. During periods of severe macroeconomic distress or panic selling where equities are being indiscriminately dumped, TLT holds up or gains value while stocks collapse. Having this dedicated liquid buffer means I never have to sit on the sidelines or sell core long term equity holdings during a downturn. Instead, it gives me the liquid capital needed to aggressively cycle directly back into top tier equities when deep dislocations present generational buying opportunities at depressed valuations.

Peter Lynch

Peter Lynch is perhaps the most influential figure in shaping how I look at equities. His famous 13 minute rule states that if you spend 13 minutes a year on economics, you have wasted 10 minutes. This resonates deeply with me because I used to get caught up in the exact trap he warns against. I would constantly worry about a big recession coming, attempting to time the top and predict macroeconomic shifts instead of just focusing on the actual companies I owned. I made the critical mistake of letting fear over economic factors that were completely out of my control dictate my portfolio. This caused me to sell massive winners like pltr & app way too early, loosing out on 100’s of % returns on these companies. I still hold some app, but sold out of pltr fully around $100 but started trimming in the 50-60 dollar range. After buying in the mid 20’s, if I would’ve held with conviction it would’ve caused portfolio changing gains. Today, I am entirely disciplined. I tune out the macro noise and focus strictly on the fundamental execution of the businesses in my portfolio. Lynch also pioneered the idea of hunting for exceptional companies that do not yet have massive analyst coverage. I have started specifically looking into these underfollowed names, realizing that his thesis is absolutely correct. When a fundamentally sound, rapidly growing company is operating under the radar, you have an incredible edge. Once Wall Street and institutional analysts finally wake up and initiate coverage, the stock undergoes a massive rerating, producing incredible gains for the early investors who actually did the ground level research. This directly ties into another core Lynch philosophy that I strictly adhere to: know what you own and why you own it. You have to understand the business model simply and deeply. If you cannot explain why a stock is going up based on its earnings and cash flow, you should not own it. Our philosophies align perfectly on the concept of bottom up investing. Lynch taught that your edge does not come from Wall Street experts, it comes from doing your own homework and understanding the businesses you own better than anyone else. This is the exact framework I use when I analyze a company’s fundamentals, breaking down revenue growth, EPS beats, and management commentary to build my own conviction. Lynch categorized companies to tailor his expectations, which directly mirrors how I balance my portfolio. I allocate heavily to tech for aggressive, fast growing market leaders, but I also anchor my capital in resilient stalwarts like Linde and Mastercard for stable compounding. When I held onto AMD and Alphabet during their massive, fear driven drawdowns, I was applying Lynch’s exact philosophy: if the fundamental story of the company has not changed, you do not sell just because the stock price drops. He championed the idea that in the long term, there is a one hundred percent correlation between the success of a company and the success of its stock. When the broader market panics, I trust the underlying math, just as Lynch advocated. One of Peter’s favorite sayings is Watering the flowers, not the weeds. I mentioned this earlier about my pltr and app experience, but this has happened with countless companies. I bought 50 shares mu in the mid 70’s in april 2025, this position would’ve changed my portfolio returns just like the others. I sold because of a nice bounce and my large amd holding, completely breaking my rules. I could talk about this for countless companies but I don’t want to keep going on and on, I want to emphasize the key lesson I have learned from this. Full understanding the companies I own and holding them, letting the long term thesis and vision play out, focusing on the long term fundamentals and not let short term economics or price action impact my decision.

Why I Strictly Avoid Margin

A foundational pillar of my investing framework is that I never use margin. While leverage is often sold as a tool to amplify gains, its reality is far more destructive: it strips away your greatest asset as an investor, which is staying power. My entire philosophy is built around patience. I wait for world class companies to pull back to key technical levels, I analyze the fundamentals, and I let the long term thesis play out. When you introduce margin into that equation, you completely forfeit control. You place a ticking clock on your investment and hand the ultimate decision making power over to your broker. If a structurally sound company experiences a temporary, fear driven drawdown, a cash investor can simply hold, or even aggressively buy more, just like I did with E.l.f. Beauty and AMD. A leveraged investor, however, gets a margin call and is forced to liquidate at the exact moment they should be accumulating. There is no greater modern example of this specific risk than the recent story of Leopold Aschenbrenner. I watched his entire rise unfold in real time on X and across social media. He had an absolutely outstanding background, an undeniably brilliant mind, and a deep, nuanced understanding of artificial intelligence. For a long time, I watched his specific stock plays and market calls come to fruition. He was making incredibly smart moves and rapidly scaling his fund to massive levels, earning the respect of the financial community. But his fatal flaw was the aggressive use of leverage. He was controlling massive amounts of equity for every single dollar of actual investor capital. When the summer AI infrastructure selloff hit, the market experienced a violent, albeit temporary, rotation. The very stocks he had built his core thesis around took a sharp dive, while the software names he was shorting squeezed higher against him. Because he was so heavily leveraged, his broker did not care about his brilliant long term thesis or his outstanding background. The math simply broke. He was hit with massive margin calls and was forced to liquidate his entire public equity portfolio in a single block trade. The tragic irony of the entire situation is that he was forced to sell his positions at the absolute bottom, just days after correctly identifying the pullback to his investors as a great buying window. His fundamental thesis on AI infrastructure was not wrong, but his leverage made it mathematically impossible for him to survive the volatility. Seeing that entire situation unfold completely reaffirmed my strict stance against margin. You can be the smartest person in the room, have the most impressive background, and pick the exact right stocks, but if you use massive leverage, you are always one violent market swing away from total ruin. Leverage does not change what you own, it only changes how long you are allowed to own it. I refuse to let a broker or a temporary market panic decide when my investment thesis is over, which is exactly why my core portfolio will always remain entirely cash funded.

Outperforming the market does not require predicting every macroeconomic shift or chasing every trending stock. It comes down to fundamental discipline, emotional control, and waiting for market dislocations to create asymmetric opportunities. By combining deep fundamental research, strict risk management, avoiding leverage, and letting long term winners run, I keep my edge intact. In my next post, I will publish my first full company breakdown on ServiceNow (NOW), detailing why its platform stickiness, enterprise workflow dominance, and expanding margins make it my top conviction thesis today.