After 5 Years, Our Initial Values and Predictions Still Ring True

By Norman F. Klopp, Jr., CFA, Partner

The quotes above are from a newspaper story that announced the formation of Midwest Investment Management. Both quotes refer to the foundation of our investment philosophy: the focus on investment risk is as important as the focus on reward.

That newspaper story prompted several people to ask us, “Why are you so concerned with risk?” We replied, “Because the first important step toward creating wealth is not to lose it!”

Important beliefs

When our company opened on January 4, 2000, my Partners and I reaffirmed our individual and collective beliefs that continue to underpin our investment philosophy:

• Value investing provides a less volatile way of achieving long-term wealth creation;
• We can add value and control risk through disciplined investment research;
• Real cash flow drives stock prices over the long term;
• Good companies become great investments if we are disciplined and patient in determining the price we pay for their stocks. Events of the last five years – the stock market “bubble,” the worst bear market since the 1930’s, the shock of September 11th, the subsequent war on terror, and an economic recession – only served to strengthen our beliefs.

Structured for success

Our Managing Partner, Mark Wipper, adds; “The investment philosophy of our firm is coupled with our tradition of outstanding personal service.” We are a TEAM, not a group of individuals merely “working together” at a firm.

The past five years have reaffirmed our values. We continue to be guided by them. • “We think it is a time when people should focus just as much on risk as reward.” • “Any gains achieved over the last few months could be wiped out quickly.” —Cleveland Plain Dealer, Jan. 5, 2000