One of the common phrases we use at Trent Capital is, "Finding great businesses is easier than buying them at the right price." Often, the most important variable in having a successful investment and managing risk is the price paid for a security. Many of our top holdings are now at lower prices than they sold for five or ten years ago even though the earnings of the businesses are significantly higher today.

Although price is typically the most important investment consideration, we also like to invest in businesses we think have the ability to perform in both good and bad economic times. These companies often have dominant market share in products that are inexpensive and consumed frequently, enjoy high barriers to entry and have strong brand names. Examples include PepsiCo selling snack chips and beverages, Caterpillar selling construction and mining equipment, and Visa providing global transaction processing services. PepsiCo, Caterpillar, and Visa are among our largest holdings because each company has a good business and is selling at a very attractive price. Ultimately, we think this business boils down to what you buy and what you pay for it. Think of it as trying to be a good shopper.

We believe investing is about trying to obtain the highest risk adjusted forward rate of return over a long period of time. In order to reach that goal, we focus on what we are buying and what we pay for it. The most important decision is the purchase price relative to the value of the investment. The value of an investment is a function of the future cash flows generated from the current assets and the reinvestment of those cash flows by either the investor (reinvesting the dividends) or the management.  

The quality of the cash flows is a function of their degree of predictability. We believe it is better to analyze a business model by looking at the asset side of the balance sheet and determining how much cash is being generated by the assets necessary to run the business.

We have a very long time horizon, and we think in terms of buying something and holding it until better opportunities become avail­able or we think we made a mistake. By definition, owning shares of companies for years or even decades means that some, perhaps all, of our investments will traverse rough patches along the way, whether they are specific to a company, an industry or the broader market. We know in advance we are going to own businesses in periods of rising interest rates, falling interest rates, inflation, disinflation, a weak dollar, a strong dollar, and so forth. Therefore, when we think about purchasing shares of a company, we have to weigh carefully up front whether we think the business can withstand inevitable shocks in addition to considering the likelihood the business can grow earnings power, and therefore intrinsic worth, over full cycles. Then, company by company, we set out to build a durable, all-weather portfolio of businesses that can compound over the long term.

Below are the maximums set by the Internal Revenue Service for 2012 for the various categories.  Trent Capital can assist those seeking to maximize their contributions by plan design consulting, a service we offer to our clients.

While it's convenient to use e-mail or surf the Web using your laptop or other mobile devices from your favorite hot spot, the Federal Trade Commission and the Better Business Bureau warn people to be careful. New hacking tools are making it easier for people to steal usernames, passwords, credit card numbers, electronic mail and other personal information. Some tips on how to avoid becoming a victim include:

• Don't use a wireless network if it doesn't require a unique password. Networks that don't, or that have generic passwords available to many users are vulnerable to hacking.
• Use a unique password in each hot spot in case one of your passwords is hacked.
• Be sure the website and network are encrypted. Look for "https" at the beginning of the Web address, which indicates your browser and the computer on the other end are both encrypting the information.
• If you're using a computer, make sure you have file sharing turned off and a firewall installed.
• Avoid typing passwords and other personal information into public computers which could have "key logger" software for recording keystrokes.
• Don't remain logged onto wireless hot spots. Log off after every use and don't leave your mobile device unattended.