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Investment Steps

Our Investment Process

Our Investment Process


The source of all profits in investing and the world at large is the hard work and ingenuity of people. As countries and continents become more interconnected, more people from all over the world are able to contribute more than ever to the global economy through their ideas, productivity and consumption. These trends should continue well into the future, driving long-term global economic growth.


We begin by surveying the entire world for investable asset classes, removing those that do not have enough liquidity or accessibility to make the cost of investing worthwhile. The historical and potential performance of the remaining asset classes, and the ways they have typically moved in relation to each other and inflation, are then analyzed and projected. These become our long term market expectations.


To construct portfolios, we look at various risk/return factors. We take into account the uncertainty of estimates and inputs by modeling many potential outcomes, and identify portfolios that perform well in a range of scenarios. Estimating the size and frequency of an asset class’s largest losses helps us find portfolio weights that can minimize the impact on a portfolio. We also look at multi-period returns (geometric average) in order to take into account the reduction in returns caused by volatility over time.

Investment Analysis

Once we have developed a range of optimized portfolios we begin to look for investments that in combination will provide the exposure to each asset class that our portfolios call for. In selecting investments we look for tax efficiency, low transaction costs, and reasonable management fees given the style and type of the investment. We include a well diversified group of asset classes in our portfolios so that they are able to benefit from a consistent rebalancing strategy and maintain the proper risk exposure.


We also look for ways to improve the risk and return trade-off of the asset classes in which we invest. These can include passive indexing, alternative indexing, active managers, option strategies, or individual securities. While we believe that markets are generally efficient and that short term attempts to beat the market generally become unprofitable due to taxes and transaction costs, we also believe that there are factors such as company size and valuation that provide exploitable opportunities at low cost over the long term. Similarly, the indexes used to follow asset classes and the way they are formed can create biases in those indexes and have a significant impact on risk and return, making the selection of an index an important decision.


Choosing which funds and indices to use also impacts investment results. The most familiar indices and funds do not necessarily make the best investments. We use our own critical eye and independent 3rd party research to assess available investment offerings on an ongoing basis, and use the most current research available to inform our decision making process. As a small firm, we have the benefit of being extremely nimble, and can bring new ideas into our process quickly and easily.