Touching news this week in Nashville, where police praised rock legend Jon Bon Jovi for helping prevent a tragedy by speaking to a woman who was on the ledge of a bridge. Bon Jovi helped talk the woman off the ledge and then hugged her after lifting her over the railing to safety.

"It takes all of us to help keep each other safe," Police Chief John Drake said in a brief statement.

Today, we're chatting with Frederico Santarém, a member of our Mastermind Community, about his investing process, influences, and long-term ownership of great companies.

All this, and more, in just 6 minutes to read.

— Matthew

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Trivia

Investing In Great Companies Over the Long Haul With Frederico Santarém

After the global financial meltdown, 2009 left an indelible mark on millions of lives, both in the U.S. and abroad. For many, economic hardship, job losses, and financial uncertainty defined the period. That’s also how Frederico Santarém remembers it. He was living with his mother, and both of them were unemployed and ill-equipped to navigate the instability. 

His family’s lack of financial literacy compounded an already dire situation. He remembers opening the kitchen door to find food supplies dwindling, which wasn’t a fleeting moment of scarcity; it was a prolonged period of stress and uncertainty.  

“I felt hopeless because I couldn’t help my family,” he recalled in an interview last week. 

Santarém vowed never to be broke again. Eventually, he landed a job, then another, then a third. For several years, that panned out fine until around 2015. After working three jobs—sometimes seven days a week—he wanted his money to start working for him, too. That led him on a path to the world of stock investing.

In this conversation, Fredrico discusses his journey to financial freedom, finding great companies, reading, and more. 

What kind of investor are you? 

I call myself a value investor, but not in the traditional way of looking for low-P/E valuations, right? I try to find good opportunities, whether it’s low valuation, but also from understanding human behavior. I try to see what most market participants are doing, then find value in pockets across sectors and countries. 

When did you first become interested in markets and investing?

I was a little late to the game. I was working three jobs, seven days a week, in 2015. I wanted to know what the richest people in the world did to afford to have different companies, a nice home, and free time. How did they do it? Then I understood, oh, these people invest their money. So that’s when I started, almost 10 years ago. 

How did you get started?

I was always interested in buying individual companies. I’d buy ETFs for different sectors while researching the sector, but I have always looked to invest in individual companies. I read a ton of books and listened to podcast interviews to learn as much as I could. 

Who did you learn the most from?

One of the first books I read was The Intelligent Investor from Benjamin Graham, Howard Marks' The Most Important Thing, and Tony Robbins’ Unshakeable. It taught me that every single bad market moment will pass, and bear moments are actually good for the long-term investor. Seth Klarman and Joel Greenblatt also influenced me. Mohnish Pabrai helped me, as well as the We Study Billionaires podcast, which I’ve listened to since 2017. 

Tell us about your firm, Investimentos Lucrativos.

I started the project in 2019. The original idea was to teach online, and the pandemic got more people interested in online learning. The main goal has been to help other Portuguese people achieve financial goals, invest, and avoid the financial problems I had. The project has always been about educating and helping to help people achieve financial freedom. 

In English, my project is called Lucrative Investments. I have a service for people to learn about investing, and I have a service where I research companies and publish detailed reports about them. My mentorship program allows people to follow me closely, how I research companies, how I invest, and how I compound wealth. 

How has your investment philosophy evolved over the past decade?

I pay more attention to the risks. When I research a company, I take a lot of time on its background, history, and businesses. But then I really study the risks. As we all know, the biggest risk will come out of nowhere, like the 2020 pandemic. 

How many companies do you typically hold in your stock portfolio?

Usually, around 20. I think of myself between diversifying and concentrating. I have 23 companies right now. About 25% of my portfolio is in Meta. Three stocks make up about half of my portfolio. In a way, I’m very concentrated, but I’m also diversified, with 23 stocks. The reason for the concentration in a few stocks is that they’re really appreciated in value since 2018. 

When Meta sells off — it has many times, like all great stocks — did you add shares, cut your position, or do nothing?

I started the position in 2018 after a selloff and bought more ever since after a pullback. I understand their business as an entrepreneur. I’m one of their clients, and I know how their platform runs, how their advertising business works. It was down a lot in 2022, and I bought more around $90 per share. Now it’s over $500 in less than two years. 

Are you still positive on Meta for the next 5-10 years?

Yes, I see great quality in their business and advertising. I will not sell my position unless it goes crazy, in which case I’ll trim it. But for now, I remain positive on Meta and have no reasons to trim or sell it completely. 

Did you mention last year that you own Alphabet?

No, it's one of my biggest regrets that I never bought. I had a good opportunity in 2022. I regret not buying Google, but I can’t complain because I had Meta. 

What other big holdings do you have?

Alibaba, which isn’t working too well. But it’s OK because I plan to invest for the next 70 years. We all know that some great companies don’t do much for 10 years, then they rally. Microsoft basically went 15 years going nowhere after 2000. 

I’m also finding amazing businesses in Poland, companies growing and generating good returns on capital. 

When did you join the Mastermind Community and why?

I remember the day because I was cutting my grass, listening to Clay Finck, who said that there was a new Mastermind Community. I left the lawnmower and went right to my computer to apply. I had been looking for a group like that for years. I wanted to join like-minded people to help me achieve my goals. I’ve since established good friendships and partnerships, and people who push me to think differently. It’s nice to see new perspectives on companies and avoid mistakes. I’ve made good partners for the rest of my life, which was a big reason I flew to Omaha for the Berkshire Hathaway annual meeting. I had no excuse because I had a group of people to meet there. 

What have you enjoyed the most about the community?

I love getting insights on companies and sectors I might not otherwise consider. I love our discussions and zoom calls. It makes me richer, wiser, and happier. It’s not just stocks, either. You learn about thinking, mental models, and living a good life. 

What are your thoughts on the current stock market overall? 

I think the S&P 500 is a little deviated from reality because employment is falling. Unemployment is rising. We have the highest number of bankruptcies since the global financial crisis. Yet we hit new highs almost every week. I think it’s disconnected. I know the market doesn't need to follow the economy, but I think some risks that people don’t recognize are starting to materialize. Right now, I’m seeing more opportunities in international markets, not the U.S. I’m looking for emerging markets, like Poland, which have companies with wide moats and surging revenues. 

What are some of your other favorite investing books?

Richer, Wiser, Happier. Big Mistakes by Michael Batnick. Where the Money Is by Adam Seessel which taught me to look at intangibles. Factfulness is also great, because it shows us that the world keeps improving. The media might make it seem gloomy, but health is improving. Education is improving. The economy is improving. Everything is better now than it was hundreds of years ago. Compared to our ancestors, we live in paradise. 

And from Unshakeable by Tony Robbins, I learned that we’re usually in a bull market. So enjoy life. Don’t be so stressed with stock crashes and predicting the market. 

Peter Lynch said more money is lost anticipating corrections than has been lost in the corrections themselves. What else do you like to learn from, aside from books?

Mentorships and masterminds have helped me the most. I try to be in wise groups. I also think that I learned a lot about investing by doing my PhD in biology. People are more aware today of the overlap between investing and Darwinism. I try to see how nature, the economy, and markets work. 

What’s an ideal or typical day for you?

I like to start slow in the morning, with breakfast, maybe some swimming or exercise with weights. I take care of myself in the morning. After lunch, I might have meetings. I’ll also research companies and see what’s going on in the market, then prepare materials for my mentorship students, whom I follow very closely. 

I believe exercise is really important, and sometimes you get a great idea while swimming or walking. I also love to garden, which opens your mind. You have to give your mind room to think and breathe. Years ago, I learned that you should really take care of your temple and your temple is your body.

What do you love to do aside from investing?

I’m a nature guy. I love being in nature, walking on a mountain or near a river. Big cities without nature are stressful. I love greenery and blue skies, all the colors of the countryside. I love the water, breeze, and fresh air. 

Back to investing, do you have an ideal timeframe for your investments?

I prefer that most of my portfolio is allocated to companies that I will not be concerned about for the next few years. I won’t say “forever” because things change. Yes, companies can exist for 100 years, but many do not. So I try to allocate my portfolio to companies I won’t be concerned about for the next five years or so. Sometimes I will trim a position if it gets really big, but I try to hold stocks for long periods. 

What are some investing mistakes you’ve made and what did you learn?

My biggest mistake ever was Nvidia. I’m not just saying that like many others who feel they missed out. I invested in Nvidia in 2017, then sold a few months later with a nice 20% return. I thought I was the best. Then I remember it fell a lot in 2018, and I said, look? I’m good at this. But then as it soared since then, I realized, wow, I have a lot to learn. Even then, it was the top company in gaming. Then crypto mining, AI, and data centers, and everything else. So that was a big mistake in selling. 

You’re not alone in Nvidia, and you’re not alone in that often, our biggest mistakes are selling wonderful businesses too early before compounding really takes shape. 

The biggest mistake often is just pulling the plug too early. It's that simple. But it was also a great lesson. My Nvidia mistake is precisely why I didn’t sell Meta in 2022. I really believe that. 

Well said. Do you have any pieces of advice for young folks entering the industry?

Read a lot. Take courses. Surround yourself with people wiser than you, people who challenge your thoughts and beliefs. I especially like the second part because sometimes we focus on just one angle when other people can challenge our beliefs. That helps us grow. But definitely read a lot.

Do you have final thoughts to share?

Life is really short, so enjoy your family and friends. The stock market should be a tool to achieve your goals, but not the main focus. Go out, enjoy nature, enjoy your family and friends, and enjoy your life as much as possible. 

Dive deeper

Follow Frederico on YouTube and Instagram or connect with him on LinkedIn.

Learn more about our Mastermind Community here.

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