Check Capital Management

Quality Growth Program

Check Capital’s flagship strategy since we opened for business in 1987, the Quality Growth Program exemplifies our investment ideals.  From the outset, we’ve focused on buying industry-leading companies featuring durable profits and selling at a bargain price.  Quality Growth portfolios are typically comprised of 15-to-20 stocks, with holding periods often four years or longer.

Click hereto see the Quality Growth Program’s performance.

 Private Program

Check Capital’s Private Program is a high-risk strategy that has delivered high returns.  It’s only suitable for investors who can withstand extreme volatility and a possible loss of capital.  While the Private Program doesn’t require borrowed money, it does employ leverage through the use of stock options. Aggressive investors have found the Private Program advantageous for a portion of their portfolio.

Click here to see the Private Program’s performance.

 Berkshire Covered Calls Program

For stock investors seeking a relatively low-risk alternative yielding a return superior to that of most bonds, Berkshire Hathaway covered call options are an attractive proposition.  While stock options are used by some investors to speculate, others use options to reduce risk or earn income.  This strategy is part of the latter group.

Click hereto see the Berkshire Covered Calls Program’s performance.

  Two-Bucket Approach

Statistics show that stocks, over the long term, have produced higher returns than bonds, Treasury Bills and real estate.  However,  despite their attractive performance, stocks have a drawback:  Their returns are volatile.  The market, while achieving new highs in every decade since the 1930s, also experiences setbacks as deep as 40-50%.  On average, over last 70 years, the S&P 500 has fallen in approximately 20% of all years. Yet in 95% of all five-year spans, the index has posted positive results.

Therefore, to invest with Check Capital Management, one should see the big picture, namely, that the superior performance of stocks means additional volatility.  But we help clients prepare for it with our “Two-Bucket Approach”.

“Bucket #1” holds money needed to cover your shorter-term needs, such as living expenses.  This money should be placed in money-market funds, short-term bonds and other relatively stable investments.  We make bond purchases for clients that are customized to fit their individual circumstances.

Next comes “Bucket #2”, which holds stocks and their associated higher returns.  This bucket contains money that shouldn’t be needed for the next three-to-five years.  This allocation means not having to sell stocks after a year or two of poor performance, which—historically—tends to be just when the market does best.

At the end of each year, if stocks (Bucket #2) are at a new annual high, money is transferred from Bucket #2 to refill Bucket #1.  The discipline to do this review each year and look to only move money from stocks when they are at a high are keys to proper asset-allocation.

For risk-adverse clients, we recommend that five years of withdrawal money initially be placed in Bucket #1.  Stocks, as represented by CCM’s Quality Growth Program, have always reached a new high within five years of refilling Bucket #1.  For clients willing to accept a little more risk, we believe the allocation of just three or four years of withdrawal money to Bucket #1 to be appropriate.

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