Broker Check

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