Introducing the 8 to 80 Portfolio

By Charlie Bilello

23 Oct 2020


In an investment world that is increasingly shifting towards passive index funds and ETFs, what’s the case for owning individual stocks?

For Howard Lindzon (founder partner at Compound), the answer simple: do it for profit, and do it for joy.

Howard has a unique view of the investing landscape, sitting at the intersection of private and public markets. He’s been an entrepreneur, a hedge fund manager, and most recently, a successful seed stage venture investor.

Along the way, he’s built a network of brilliant friends and investors that is unparalleled in its breadth and depth. Using this vast network and his own acumen, he’s been able to consistently stay on top of the most important trends in technology and markets.

In public equities, Howard has distilled these trends down to a select group of companies he calls “8-to-80” brands.

These are growth companies with huge global market potential, whose products span generations: from 8-year-olds to 80-year-olds.

For many years, Howard has used this concept to manage his own stock market portfolio. Now, for the first time, investors can track Howard’s 8-to-80 portfolio as part of their overall investment allocation at Compound.

Howard will be the first to tell you there are no sure things when it comes to investing, particularly in stocks. No return is ever owed to anyone and there are never any guarantees. There is always risk.

But every decade, there are incredible opportunities for investors that take a long-term outlook and can withstand the inevitable periods of market stress.

For Howard, owning “8-to-80” brands when markets are “in turmoil” is a source of comfort (he uses many of these products each and every day), giving him the confidence to not only hold on but often “go shopping” (add to positions) when the world seems as if it’s going to end.

No one knows what the future will bring, but we believe great founders and great companies will continue to solve the most important issues we are confronted with. The 8-to-80 portfolio is the manifestation of this idea. It’s an optimistic bet on continued human progress – for profit, and for joy.

For more information on the 8-to-80 portfolio, see the FAQ below or contact us at info@compoundadvisors.com.

FAQ

1) Where are the accounts held?

TD Ameritrade is our custodian. You can get started by opening a new account here. When the account is open, contact us to begin the onboarding process.

2) What types of accounts are available?

We manage both taxable and retirement accounts.

3) What is the minimum investment?

$500,000 in total assets with Compound.

4) What are the management fees?

1% annually, billed quarterly at the end of each quarter.

5) Are there any lock-ups?

No. This is not a hedge fund – it is your own separately managed account. You can end the advisory relationship at any time.

6) What are the investor qualifications?

At this time we can only accept U.S.-based investors (U.S. citizens, green card holders, and holders of certain visas).

7) How many positions are in the portfolio?

The number will vary but will generally range from 10 to 25 positions.

8) Is the portfolio fully invested at all times?

No. The invested allocation and can vary over time based on Howard’s view of the prevailing risk vs. reward. The uninvested portion of the portfolio is held in short-term bond ETFs and/or cash.

9) What will happen to the portfolio if there’s a bear market?

Correlations tend to rise during bear markets with the majority of stocks going down together. You should assume that any portfolio of stocks will be down during a bear market, including the 8-to-80 portfolio. One should always be prepared for a bear market to start at any point in time (no one rings a bell at the top). This portfolio is only suitable for investors with a long time horizon and a high tolerance for risk.

10) Should I invest everything in the 8-to-80 portfolio?

No. The 8-to-80 portfolio is a concentrated portfolio of stocks and is not intended to be a complete investing program. Clients are encouraged to consider additional asset classes and strategies to supplement their investments in the 8-to-80 portfolio. Compound does not provide comprehensive financial planning, tax, accounting or legal advice. Clients should consult with their tax advisors regarding any tax consequences related to their investments.

11) Do you have historical performance?

Historical performance is not available as this is a new strategy at Compound. While Howard has been holding 8-to-80 stocks in his personal portfolio for years, this is the first time that he has an account solely dedicated to the 8-to-80 theme.

We discourage investing based on past returns as the future almost never looks like the past. This is particularly true after the last 10+ years which have been extremely favorable for equity markets. Investors should have lower expectations for future returns and be prepared for more difficult markets.

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Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For our full disclosures, click here.

About the author

Charlie Bilello

Charlie is the founder and CEO of Compound Capital Advisors.

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