Income StrategiesObjective: Advantaged yields with low duration
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Equity StrategiesObjective: Generate compound returns with
differentiated value-based strategy |
Income Advantaged Strategy |
Intrinsic Value Equity |
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Philosophy:
Intrinsic Value is the eventual worth of all future cash flow discounted to the present.
Principles for Decision-Making:
A. How To Think About Markets
1. Confidence in Long Term Expectations. It is expected that continued economic progress and prosperity will be achieved with capitalism continuing to benefit private investment. But expect occasional irrational behavior from market participants. Best described by John Maynard Keynes in Chapter 12 of the Theory of Employment, Interest and Money.
2. Expect Pricing Volatility. The emotion of greed and fear of the crowd can overreact to short-term developments. Embrace the Mr. Market concept as described in Chapter 8 of the Intelligent Investor, written by Ben Graham.
B. Risk Management
3. Invest with a Margin of Safety. Always seek to pay a price materially less than the estimated value. Best described in Chapter 20 of the Intelligent Investor.
4. Continuously Assess Risk. Risks include many factors including: risk of loss, liquidity risk, inflation risk, credit risk, volatility risk and business risk. In addition, human involvement adds: envy, temperament, competency, and execution risk. Risk cannot usually be numerically quantified but must be continuously assessed.
5. Be Businesslike in Managing the Investment Operation. What makes sense in business, makes sense in investing. Stay within areas of competence, if one cannot understand an investment, avoid speculative action. Keep turnover and expenses to a minimum. For long-term assets, maintain long-term focus. For short-term assets, maintain liquidity focus.
6. Be Conservative. In all aspects of the investment operation, including appraisal, assumptions, forecasting, assessment of risk, among all other elements.
7. Control the Controllable. The majority of time will be dedicated to discipline, consistency, temperament, security selection, prudent diversification, reacting rationally to developments and of course not overpaying. Uncontrollable factors such as the economy, interest rates, politics, natural disasters, war, currency, etc. will consume very little time of the investment operation.
1. Confidence in Long Term Expectations. It is expected that continued economic progress and prosperity will be achieved with capitalism continuing to benefit private investment. But expect occasional irrational behavior from market participants. Best described by John Maynard Keynes in Chapter 12 of the Theory of Employment, Interest and Money.
2. Expect Pricing Volatility. The emotion of greed and fear of the crowd can overreact to short-term developments. Embrace the Mr. Market concept as described in Chapter 8 of the Intelligent Investor, written by Ben Graham.
B. Risk Management
3. Invest with a Margin of Safety. Always seek to pay a price materially less than the estimated value. Best described in Chapter 20 of the Intelligent Investor.
4. Continuously Assess Risk. Risks include many factors including: risk of loss, liquidity risk, inflation risk, credit risk, volatility risk and business risk. In addition, human involvement adds: envy, temperament, competency, and execution risk. Risk cannot usually be numerically quantified but must be continuously assessed.
5. Be Businesslike in Managing the Investment Operation. What makes sense in business, makes sense in investing. Stay within areas of competence, if one cannot understand an investment, avoid speculative action. Keep turnover and expenses to a minimum. For long-term assets, maintain long-term focus. For short-term assets, maintain liquidity focus.
6. Be Conservative. In all aspects of the investment operation, including appraisal, assumptions, forecasting, assessment of risk, among all other elements.
7. Control the Controllable. The majority of time will be dedicated to discipline, consistency, temperament, security selection, prudent diversification, reacting rationally to developments and of course not overpaying. Uncontrollable factors such as the economy, interest rates, politics, natural disasters, war, currency, etc. will consume very little time of the investment operation.
