Gerry Frigon of Taylor Frigon Capital Management On The 5 Essentials for Smart Investing

An Interview With Jason Hartman

Lack of financial education. People should have basic knowledge about consumer debt, interest rates, credit cards and financial planning so they can make educated decisions, particularly once they have access to financial products. Bad financial and investment decisions can lead to long term challenges with credit scores and debt. With the right education and tools, people can set themselves up for long term success.

As a part of my series about The 5 Essentials of Smart Investing, I had the pleasure of interviewing Gerry Frigon, President and Chief Investment Officer at Taylor Frigon Capital Management (www.taylorfrigon.com).

Mr. Frigon has over three decades of experience in investment strategy, planning and portfolio management for private investors and institutions including over 21 years at Merrill Lynch in the San Francisco Bay Area. During that time, he has managed portfolios with the same disciplined process directly descended from the classic growth philosophy implemented by Thomas Rowe Price and Richard Taylor.

Thank you for doing this with us! Our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?

I have over three decades of experience in investment strategy and portfolio management. I worked at a major Wall Street firm in the San Francisco Bay Area for 21 years and then started my own firm in 2006. In the first 15 years of my career I learned how to manage portfolios following the classic growth philosophy implemented by Thomas Rowe Price and Richard Taylor. Richard was my father-in-law and mentor. That philosophy is a disciplined process that dates back to the 1930s and is a style that can be attributed to most of the big fortunes that have been made throughout history — maintaining ownership of great businesses and holding them for very long periods; decades, in some cases. The strategy seeks to find growth companies to own through multiple market and economic cycles as opposed to trying to play the market for short term gains. We still follow this process today — it’s the core philosophy of our business and informs everything we do.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?

Having a good mentor had a huge impact on my career and led me to the investment strategy we follow to this day. While many people focus on the market and try to buy and sell for short term gains, I learned that having a long-term strategy that focuses on the businesses you invest in can lead to the best returns. I followed this process throughout my career and then built my businesses on these principles. We have a research team who thoroughly analyzes companies to determine whether they are well run, have large addressable markets and significant growth potential, among other criteria. If we decide to invest, we expect to do so for the long term. It’s the opposite of how a lot of people invest but it’s served us well over the years.

Are you working on any exciting new projects now? How do you think that will help people?

A major theme for us is distributed computing and blockchain. We believe it will upend most existing structures in business and economics. This will empower more people in the world who have largely been left out of the current centralized systems.

Ok. Thanks for all that. Let’s now jump to the main core of our interview. According to this report in Fortune, nearly two-thirds of Americans can’t pass a basic test of financial literacy. In your opinion or experience what is the cause of these unfortunate numbers?

Lack of financial education. People should have basic knowledge about consumer debt, interest rates, credit cards and financial planning so they can make educated decisions, particularly once they have access to financial products. Bad financial and investment decisions can lead to long term challenges with credit scores and debt. With the right education and tools, people can set themselves up for long term success.

If you had the power to make a change, what 3 things would you recommend to improve these numbers?

• Better financial education — this is a crucial factor that can set people up for success early on
• Less complexity in the product offerings from Wall Street — this would make investing more accessible
• Use common sense — often if something sounds too good to be true, that’s the case. Read the fine print and do basic research when it comes to saving, borrowing or investing your money

Ok, thank you! Now to the main question of our interview: You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing, what would you say? Can you please give a story or an example for each?

• Focus on businesses not the market — don’t trade stocks, buy businesses you want to own
• Aim to invest in businesses in fertile fields of future growth for the long term, during multiple market and economic cycles
• Look for companies who are innovators solving problems and creating new markets
• These businesses should have promising revenue and earnings growth that aren’t yet well-recognized or fully valued
• Look internally at the businesses to ensure they are well-run

What are your thoughts about investing in cryptocurrency? Can you explain what you mean?

We are actually on the verge of revolutionary new developments in many areas, among them two important related developments: blockchain technology and distributed computing. This economy will be transformed by the rise of distributed computing tied to blockchain technology and will power the next generation of computing and technology, not to mention almost every other sector in the economy. The “central control” of everything from computing to finance will be upended.

What are your thoughts about daytrading, using apps like Robinhood? Can you explain what you mean?

As mentioned we believe the best strategy is to own well-run businesses in front of fertile fields of future growth. We don’t trade stocks, we own businesses. Our performance speaks for itself and it’s the reason our mutual fund has been named amongst the top five performing funds in the US.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

Richard (Dick) Taylor was my father-in-law and mentor. He learned the discipline from Thomas Rowe Price himself. Their philosophy is a disciplined process that dates back to the 1930s and is a style that can be attributed to most of the big fortunes that have been made throughout history — maintaining ownership of great businesses and holding them for very long periods.

Dick used to always say: “we get by in spite”, meaning that the world will often throw obstacles in front of you, but sticking to a disciplined process will allow you to navigate through any adversity you face.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“Faith makes things possible, not easy.” You better believe in more than yourself, or it’s going to be a rough road in life.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)

Think of what you can do for others before you think of what’s in it for you and success will happen naturally. This is what free enterprise is about. Profit is the index of altruism. It is a measure of how much of what you produce is desired by others, for their use and betterment.

Thank you for the interview. We wish you continued success!