This basilica has the distinction of being, in a way, owned by the citizens of Lyon, having been entirely financed by private donations. It is thus one of the few churches in France that belongs neither to a bishopric nor to the State. Its construction began in 1872, and it was consecrated in 1896, on the Fourvière hill (from the Latin forum vetus (“old forum”), a former Roman site of Lugdunum (“hill of Lug,” a Gallic god), the ancient name of Lyon.
During an “unusual” tour, we had the opportunity to discover this exceptional building and walk on its roof. Our guide then told us about the four towers of the basilica, each representing the Christian cardinal virtues:
• Prudence (North-East tower);
• Temperance (South-East tower);
• Fortitude (North-West tower);
• and Justice (South-West tower).
Professional deformation: these four virtues made me think of COTE 100’s four Ps: Foresight, Prudence, Patience and Presence. I will therefore take this opportunity to revisit these four “cardinal virtues” that form the foundation of COTE 100’s investment philosophy:
Foresight. According to Larousse, foresight is the “quality of someone who knows how to anticipate and who takes action accordingly.” I believe this is where the concept of portfolio diversification comes into play.
Prudence. According to Larousse, prudence is the “attitude of someone who is attentive to anything that may cause harm, who considers the consequences of their actions and acts in a way that avoids mistakes.” It is impossible to avoid making mistakes, but we want to ensure that we minimize them and that they are not too costly. For example, the excessive use of debt, for both an investor and companies, is one of those mistakes from which it can be difficult to recover.
Also, a prudent investor will invest in such a way as to win or, at the very least, not lose too much, in almost all circumstances. This is where the concept of margin of safety takes on its full importance, which can be loosely translated as “Heads I win; tails I don’t lose much.”
Patience is defined as follows: “1- Ability not to become upset by difficulties, to endure shortcomings, mistakes, etc.; 2- Quality of someone who knows how to wait calmly; 3- Perseverance, consistency in doing something, in pursuing a goal.” For me, this means that an investor must maintain a long-term horizon and not hope or attempt to achieve high returns over short periods (which can be particularly tempting these days). It takes time and patience to uncover truly attractive opportunities in the stock market. Once acquired, it also takes time for the investment scenario to unfold and for the undervaluation that was identified to correct itself.
Presence. We added this fourth “P” to the three others after a few years in the investment world. Indeed, we quickly realized the temptation of many investors to try to outsmart the market by entering and exiting at what seem to be the most opportune moments, commonly referred to as “market timing.” A wise investor knows that it is impossible to predict short-term market movements and commits to remaining present (or invested) in the market over the long term.
Even on vacation, I cannot help thinking about investing, albeit with some distance from the stock markets. On the rooftops of the Basilica of Notre-Dame de Fourvière, I could not help but reflect on the foundations of our investment philosophy.
Philippe Le Blanc, CFA, MBA
Chief Investment Officer at COTE 100
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