My Expanse Investing Philosophy

What Investing Means to Me — and How I Approach It as an Individual Investor

May 21, 2025

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By Nikotes, Author of Expanse Stocks

This is my second Annual Special piece since I launched Expanse Stocks last year, and it took me a while to sit down and actually write this. Not because I don’t know what I believe, but because investing, or at least good investing, isn’t rigid. My philosophy isn’t carved in stone. It’s a direction I try to orient myself toward, rather than a checklist I’ve mastered.

But as Expanse Stocks continues to grow, I think it’s worth putting pen to paper and sharing what guides the decisions behind the 🔗 Portfolio I manage and the businesses I study. If you’ve been with me for a while, you’ve probably seen these principles in action. If you’re new, I hope this gives you some context.

So, here it is. This is what I believe about investing and how I use it in my journey to life.

Why We Invest: It’s All About Compounding

Let’s start simple.

We invest to turn money into more money. At its core, investing is about compounding capital over time.

We're not just buying tickers or chasing trends; we’re buying pieces of real businesses to earn a share of their future cash flows. Ultimately, the value of any stock is the present value of those future cash flows. That’s it. That’s the game.

But because no one can predict the future with certainty, investing is really about assessing expectations. Every stock price reflects a set of assumptions. My job as an investor? Figure out whether those expectations are spot on.

My Focus: Durable Growth Meets Quality Businesses

There’s a lot of noise in the markets: SPACs, hyper-growth, deep value, cyclicals, turnarounds, moonshots… you name them. I’ve looked into many of them at some point. But I keep coming back to what consistently works: quality paired with durable growth.

Now, durable growth and business quality aren’t just about surface-level metrics—like low CapEx and high margins, or strong revenue growth and a flashy Rule of 40. For me, it is a more holistic combination of traits:

Owner-operator, capable and ethical management
→ See my piece on: 🔗 A Leap of Faith with Owner-Operators
Enduring competitive advantages (“moats”)
→ See my piece: 🔗 The Rareness of Moaty Software Companies: Selection of 6 Gems
Strong returns on capital and reinvestment runway—the essence of Growth and Capital Allocation excellence
→ See my primer: 🔗 The Serial Acquirers Playbook —masters of Capital Allocation
→ And my two pieces on: 🔗 Understanding Growth and Its Key Drivers and 🔗 Understanding ROIC, ROIIC, and ROCE: Measuring Capital Efficiency
Track record of consistent execution and resilience through economic cycles
Low leverage and financial strength, aka “antifragility”
These are businesses that not only withstand stress but often emerge stronger because of it.

These businesses don’t show up every day. But when they do, I act.

Patience as the Ultimate Edge

“The big money is not in the buying and selling but in the waiting.” — Charlie Munger

Few quotes capture the essence of investing better than this one. The real edge isn’t IQ, flashy trades, or insider info—it’s patience.

Most investors underperform not because they lack intelligence, but because they act too often, too soon. They check prices daily, obsess over macro noise, and jump from idea to idea. I say this from experience, I’ve stumbled on this very rock more than once, and I'm still learning.

But history is clear: the biggest winners in investing come from holding exceptional businesses for long stretches of time.

A few years ago, I came across an interview with Chuck Akre of 🔗 Akre Capital Management. He said something that stuck with me:

“If you have a stock that’s gone up ten times, the next time it doubles it’s gone up twenty times, and the next time it doubles after that, it’s gone up forty times. Compound interest and return is staggering.”

That perspective changed how I think about holding.

These days, I aim to own businesses as long as the thesis holds. I don’t sell just because something looks expensive. I don’t try to call the top. If it’s a great business, why not let it keep compounding?

Concentrate and Ride with Conviction

I don’t believe in broad diversification for its own sake. I’m not building an index. I’m building a focused portfolio of businesses I believe in, and when I find one, I bet accordingly.

That means some positions can easily make up 10–15% of my portfolio (and no, I don’t set hard caps). This is not foolishness, it is conviction backed by due diligence. If I’ve spent months studying a business, tracking its management, reading filings, understanding the model, and spotting something the market’s missing… why wouldn’t I let that idea matter? (As always: do your own DD).

Concentration demands emotional resilience. Your biggest positions will test you. They’ll be volatile. The market will constantly question your thesis. But I believe that to outperform, your portfolio must look different from the index, and that means, leaning into your best ideas.

Concentration also forces discipline and for you to raise the bar. You don’t buy just to fill a slot; you buy because the opportunity is compelling relative to everything else you already own.

As Charlie Munger once said:

“The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don't. It's just that simple.”

This approach isn’t for everyone. But, so far, it works for me, and over time as I get to be a better investor, I believe it will continue to work for the Expanse Stocks portfolio.

Don’t “Gotta Catch 'Em All”

There are tens of thousands of publicly traded companies around the world. I only need 15 to 25. That means my default stance is simple: Pass.

It’s harder than it sounds. There’s a natural sunk cost bias: after spending hours researching a company, it’s tempting to buy something just to justify the effort. But I’m learning to see research as a compounding asset: an investment in pattern recognition, not a trigger for action.

Skipping trends, ignoring hype, and passing on “hot” names isn’t laziness, it is discipline. The best investors aren’t the ones who chase the most opportunities. They’re the ones who know which ones to ignore.

Simplicity Over Sophistication

When I started investing back in the day, I used to build intricate (and often inaccurate) valuation models, obsess over valuation multiples and minute assumptions, and forecast multiple scenarios into the future. It felt productive, until I realized it often blurred the bigger picture.

Now, I stick to the essentials, and I first try to answer these questions:

✔ What does this business actually do?
✔ Why does it win?
✔ Can it keep winning?
✔ What am I paying for that future?

The more I simplify, the clearer the path becomes. Only then, I ask deeper questions and create my investor’s checklist:

✔ Is the company reinvesting a meaningful % of profits?
✔ Are those reinvestments generating high returns?
✔ Are these drivers sustainable over time?
✔ How is shareholder dilution or buyback activity affecting the results?

Because investing isn’t about predicting next quarter’s EPS, it’s about recognizing durable patterns and backing them with conviction.

Never Selling? Not Quite.

If a company is executing, compounding value, and the original thesis holds, why sell? Taxes, friction costs, and reinvestment risk can quietly erode long-term returns.

But “never selling” doesn’t mean “buy and forget”, it means “buy and monitor”. I stay close to the companies I own. If something changes materially—management missteps, a key leader departs, the moat erodes, or capital allocation goes off track—I’ll reassess the entire position.

Selling isn’t triggered by price volatility; it’s triggered by business deterioration.

I like this mantra, but I’m still learning to stay true to it. In tough drawdowns, it’s easy to waver. I’ve made my fair share of mistakes under pressure, and it’s an area where I’m actively trying to improve.

Also, there’s nuance in how I manage positions.

Sometimes I’ll trim—not because I’ve lost conviction, but because a holding has grown beyond comfort or valuation stretches too far. In a concentrated portfolio, balancing conviction with risk management matters.

And yes, I do sell/trim when I find something better. If a new opportunity offers a stronger mix of quality, valuation, and long-term upside, I’ll make the switch. But it has to clear a high bar.

So no, I’m not married to “never sell.” I’m committed to thoughtful ownership. Great businesses deserve time to compound. But when the facts change, or the risk-reward does, I act. The goal isn’t to never sell. It’s to avoid selling for the wrong reasons.

Being an Individual Investor

Most people assume the pros have the edge—they have more data, more analysts, more connections. But knowing more isn’t the same as doing better. In fact, too much information can become noise.

The truth is individual investors enjoy a few rare advantages:

🔹 No one to answer to. We don’t report to committees. We’re not judged on quarterly returns. That’s freedom.

🔹 We can wait. Where institutional capital often needs results in months, we can wait years for a thesis to play out. In a short-term world, long-term patience is an edge.

🔹 We can fish in overlooked ponds. Many of the best compounders are “boring” or too small to move the needle for billion-dollar funds. But for us, they’re just right.

🔹 We set our own boundaries. We get to define our circle of competence. We can ignore the noise and only swing at fat pitches.

And maybe the most underrated advantage? We can stay humble. No pressure to prove ourselves. No need to outsmart the market every day. We just have to stay curious, rational, and patient.

In the end, I’ll take clarity, temperament, and independent thinking over raw IQ—any day.

Final Thoughts: This Is a Journey to Life

I’m not a perfect investor, not even close. I’ve made plenty of mistakes (and I’m already working on a piece reflecting on some of my biggest ones). But I’ve come to love the process: researching, learning from other investors, listening to management interviews and watching businesses evolve in real time.

Over time, the philosophy I’ve described here will continue to evolve, too. But the core will remain the same:

✅ Focus on quality and durable growth
✅ Wait patiently for the right opportunity
✅ Act with conviction when it comes
✅ Keep things simple—don’t overthink it
✅ Embrace patience as your edge
✅ Stay humble, always

That’s how I invest at Expanse Stocks. It’s not flashy, it’s not fast. But it’s thoughtful, disciplined, and built for the long game. And that’s how I’ll continue to approach every decision.

If this resonates with you, I encourage you to explore next my Stock Picking Methodology, available in the 🔗 Portfolio corner (for paid subscribers).

The Ultimate Goal: Investing for Life, Not Just Returns

One of the guiding principles of my investing philosophy is the idea that money is a tool, not a goal.

Wealth, in my view, should be used to maximize life fulfillment, not to be hoarded or optimized endlessly.

This mindset allows me to reframe financial planning around time, health, and happiness; not just net worth and returns.

I see financial success through the lens of life experiences that create lasting value—moments that enrich us and compound in personal fulfillment. That’s why I embrace planning life’s most meaningful experiences during the stages when they can be most fully enjoyed—especially while health, curiosity, and energy are on your side.

For me, that time is now. I’m 32 (soon to be 33), and I know these are some of the most vibrant years of my life.

This philosophy calls into question traditional retirement models, which often over-prioritizes delayed gratification. Too many people over-save and under-live, passing away with unused wealth and unfulfilled dreams.

For me, the true return on investment is a life well lived, not just a portfolio well managed.

That’s why my financial strategy is about balance: investing wisely for long-term security while also allocating capital toward what matters most. For me, that means, traveling, exploring, learning, sharing quality time with family and the people I love.

What does investing mean for you?

Thanks for following along,
— Nikotes

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