Overview of Investment Process
We first study current market conditions to find out where the best investment opportunities lie. The amount of opportunities we find tells us whether the environment is favorable or risky for investors. Our goal is to achieve gains we can maintain. We believe speculative markets do not sustain themselves.
Once attractive opportunities arise, we fit them into a diversified portfolio of undervalued securities with the goal of capturing return. Diversity for us is not like regular asset allocation. Rather, we attempt to diversify by reducing various kinds of risk to capitalize on multiple possible outcomes. This creates portfolios that are different from the crowd. The intelligence that we apply is based on the study of many of the most successful investors of the last fifty years to help you achieve your investment objectives.
We spend considerable time researching the internal factors of markets to discern popular opinion so we can adopt a strategy seeking a protected position. When general security prices are depressed, our portfolios may appear traditional since risks seem low to us. However, when securities are expensive, in our view, our portfolios will look quite unconventional because the herd will be crowding into the most popular ideas and inflating their value. Reducing market risk is paramount in our minds when markets appear to us to be speculative. Our recommendations are based on well thought out principles, not market mythology.
We monitor markets and assets continuously to find, in our view, the optimal mix of risk and reward. The most important and difficult part of the process is sticking to what we believe in the face of the majority going the other way. Risk managed investing reduces the impact of decisions based on emotion rather than logic.