What is The Ethical Entrepreneur?

The Ethical Entrepreneur is a forum for me to pen my thoughts. Many years ago, I needed a name for the blog and it seemed as good a pick as anything to get me off the ground and into the thick of producing content on a regular basis. The site evolved over time to become more of a forum for my thoughts on investing but isn’t intended as a holistic source of financial advice (quite the contrary – please don’t take the content as gospel – it’s only meant to be a source of ideas!).

Any trades or investments I mention are not recommendations. They’re more of a diary that you can observe over time to learn about how I manage my own money and shouldn’t be copied ‘as is’.

I am absolutely not an expert investor (or even a professionally qualified one!). When it comes to investing, I’ve made daft mistakes, obvious mistakes, great decisions that turned into mistakes, and mistakes I never even realised until months later. Hopefully, you can learn a thing or two from these and avoid making them yourself.

I aim to make 10% to 15% a year through a combination of capital gains and income. I’m extremely keen to avoid losing capital (aren’t we all?) but in practice this means I rarely book underwater trades unless I believe the company is 1) in serious risk of further declines or 2) unlikely to reverse course over the long-term.

Hopefully, you’ll find the contents of this site a good starting point to help you develop an investing philosophy. I’m a big believer that this is a process which takes patience and a willingness to accept failure at times (hopefully not too much!), and this site is designed to encourage and inspire those virtues.

Why this blog?

I was inspired by two blogs – one of which stopped publishing new content back in 2019, and the other of which is written by a friend called Elaine. She’s a writer (sadly nothing to do with investing), and I owe a great deal of accidental encouragement and inspiration to her. You can find her blog here.

I’m also a huge fan of Twitter (you can follow me @HTViola) but I find the format too limiting for anything beyond short-form commentary. As a copywriter, I naturally prefer longer content and it seemed a bit disingenuous to preach one thing at my employer whilst doing another myself!

Although the site was originally intended as a broader range of content than investing, by the beginning of 2019 I was basically only writing about investments and the other sections of the site were falling dormant. There didn’t seem much point in continuing to write about topics I didn’t truly enjoy and so I made the decision to focus more on investing and less on ‘other topics’.

Over time, I plan to reformat the site to better display the various elements of investing such as my approach to portfolio management, risk management, psychology, stock selection and company analysis. I’m not particularly keen on turning into an amateur ‘tipster’, so if you’re waiting for a stream of consciousness on what I think The Next Hot Pick will be, then you’ll be waiting a very long time.

I should reiterate that I am in no way touting myself as The Next Warren Buffett. There are hundreds of public investors with amazing track records and fantastic analytical skills that far outclass me today, and probably always will. Having said that, I also think I know a thing or two about investing – I’ve been successfully running a portfolio since early 2012 and have learnt a terrific amount both about the markets and my own psychology that have allowed me to develop a reliable strategy that performs well both in bull and bear markets.

Other Channels

Friends and family will be quick to tell you that I am not always an easy man to contact. I believe in moderation in all things – too much work and a man is sure to lose their friends and family. Too much play and a man’s work is sure to fail. This usually means I’ve got a rather hectic calendar (up a 6am and lots of travelling to see friends and family at the weekends).

As such, a bit of persistence is often key if you need to get hold of me. I’m contactable via Twitter (@HTViola), this website, and can usually be ‘dragged’ down to a local watering hole for a swift pint or two (or fish and chips!).

I try to publish content on the site regularly but this is usually a more hit and miss affair due to other commitments. For easier to digest content, I recommend following me on Twitter where I can usually be found firing out stock and market commentary, thoughts on investing and economics, and the occasional photograph of my weekend adventures with friends and family.

I go through periods of tweeting but generally seek to engage with other accounts rather than spewing a constant stream of ‘thoughts’.

Investment Style

I am a ‘buy and hold’ investor who prioritises income and quality over short-term pricing opportunities. My portfolio comprises investments in a range of opportunities – the majority of which I seek to hold for 3-5 years, with a small ‘core’ holding for 10+ years and another small chunk of capital deployed for more opportunistic ‘trades’ (1-2 years or less).

I have a strong preference for shares that pay income (other than private placements, all my investments pay a dividend) as well as shares that have high ‘quality’ metrics including Return on Equity, Return on Capital and Profitability. I keep a close eye on the Price to Equity ratio of my companies (preferring single digits or low double digits and starting to get a bit jumpy at 20 or over) as well as the dividend yield (4-5% is my target for new investments but I occasionally dip lower than this).

I’m not at all bothered about market capitalisation – a friend of mine will often balk at small or micro caps, but I consider them an acceptable investment due to growth potential (if well run!). I’ll always look for quality and never more-so than in small caps as the potential for buying a car crash stock seems to hold an inverse relationship to a company’s size.

I also hate the use of leverage and debt – both personally and in the companies I invest in. I much prefer a good cash float and will occasionally support the sensible use of debt but companies that persistently need to borrow more and more to keep operating are just delaying the inevitable.

I’m an avid reader and find great inspiration in learning for the Greats such as Warren Buffet, Charlie Munger, and Ray Dalio – I’ll cover these in more detail throughout the blog but suffice it to say that I consider myself truly fortunately to have the ability to access their wisdom through books and podcasts and take every opportunity I can do to so!

Ultimately, I also try to avoid doing too much with my investments. So many people slice and dice their portfolios every month and I can absolutely see the attraction of this (in a totally non-sarcastic way, the urge to buy and sell is very real!). This is partly why I keep a bit of my portfolio available for ‘short-term’ trading (note, not Day Trading which I have a real aversion to). The ability to ‘trade’ a bit of capital helps to satiate my enjoyment in engaging with the markets without risking the long-term potential of my overall portfolio.

My thinking behind this is quite simple; if I can successfully identify the top 5-10% of companies in the market and invest in them, why would I ever want to change them? The only reason I can think of that makes any sense is if those same companies were overtaken by competitors in terms of prospects or suffered mismanagement that permanently impacted their ability to lead the market. Holding these companies is where the long-term profits are to be made rather than constantly churning a portfolio to eke out profits from short-term price movements.