Investment Philosophy
On average, the profitability of any business is greatly affected by the environment in which it operates. Companies that make ice cream make the most profit in a hot summer. Winter boots sell best in a cold winter.
We observe a similar principle with investments. We strongly believe that the performance of stocks, bonds, commodities, real estate and other alternative investments is strongly influenced primarily by the environment in which they operate. On average.
We use economic growth and consumer inflation as the two key macroeconomic inputs to describe and determine this investment environment.
For example, we know that during periods of high growth, stocks generally do very well and that during periods of low growth, bonds do very well. The same assets underperform when inflation is high, while commodities shine during this time.
What we do not know, however, is the future environment in which our investments will operate the longest over the next 5, 10 and 20 years. For this reason, we structure and diversify our investments to perform well in all macroeconomic environments from the very beginning. This removes much of the guesswork while delivering superior risk-adjusted returns.
This approach is called Risk Parity and is achieved through broad diversification across a variety of asset classes, regions and industries based on specific risk and return parameters.
We invest our own money this way and believe it is the best approach over the long term. Join us.
Investment methodology
1. Economic growth proxy data is determined and gathered
2. Inflation proxy data is determined and gathered
3. Asset class proxy data is determind and gathered
4. Periods of high/low growth and inflation are determined and categorised
5. Historical asset class returns are backtested and categorised based on data availability.
6. Asset class, geography, industry and currency allocations are calculated.
7. Individual investments are selected to fill in each allocation based on available and future liquidity.
9. Individual investments are purchased on the market simultaneously.
10. Portfolio is maintained at set allocations and quarterly performance reports are provided to investors.
