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How to beat an index: Invest like a business owner (AdvisorOne)

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“Instead of trying to time the markets and getting sucked into short-term volatility, we take a long-term view and let the markets work for us,” said David Rolfe, chief investment officer of Wedgewood Partners. “Too many of our competitors try to do otherwise, and we refuse to play that game.” Wedgewood was founded in 1988 and today has $1.7 billion in assets under management. “To outperform an index, we believe that our portfolios must be constructed as different from an index as possible,” Rolfe said. “Thinking and acting like business owners reduces our interest to those few businesses which are superior.” Rolfe said the firm looks for 20 good portfolio finds where the valuations make sense. That way, “clients don’t have to sacrifice growth to get value and vice versa.”