What We Believe

Some general thoughts about markets, investors and portfolio management:

• Markets strive to function efficiently but rarely achieve it due to investors' cognitive and behavioral biases, imperfect information, irrationality and inattention.
• Investors should achieve better results when their decision-making emphasizes facts over forecasts, evidence more than estimates, and probability rather than predictions.
• Market inefficiencies and unexpected change create opportunities for abnormal returns. 
• Wide diversification is only required when investors do not understand what they are doing.
• Most investors neglect or misapply basic principles of probability.
• Not all risks are well compensated.
• Most investors pay too much attention to maximizing gains and too little to minimizing losses.
• Large gains and small losses are the key to long term results.
• It is impossible to produce superior performance by doing the same thing as most other investors.
• Active management may provide real benefits to investors compared to passive strategies:
  • Higher alpha
  • Lower beta
  • Higher Sharpe ratio
  • Asymmetric risk profile
  • Lower correlation to the rest of a portfolio