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Investor Letter

January 2022
Artem Verbo Zhg5txgvogq Unsplash

Feeling the Wind

Markets behave like nature. Like winds, they blow from all directions, almost randomly. They can feel good at times, but can also give chills that are outright miserable. Successful investors and sailors, on the other hand, recognize that such forces are unavoidable and position themselves with less visible but more powerful forces to reach their destination.

There Are Stronger Forces Beneath The Surface

Just as markets have winds, they also have ocean currents. Although they are less visible, they have repeating, persistent, and predictable patterns that sailors study and use to plan their voyage. It is our interest and job to study these market currents and position our portfolio to ride these massive currents.

What Currents Are We Taking Advantage Of?

One example is the Valuation cycle. Periods of optimism can drive market rallies and create immense wealth in a short span of time. Pessimism, on the other hand, can depress prices but offer attractive opportunities to buy. Understanding how markets swing between extremes allows us to look for opportunities in the right place.

Why The Currents Are Useful To Us?

Like sailors, studying and making use of the valuation cycle helps us to ride out the winds of the market and navigate markets successfully – making use of the valuation peaks to reduce exposures in areas that are less attractive, and troughs to increase exposures in areas that provide better risk-reward going forward.

Do I Need To Wait 10 Years For Valuation Trough?

If investors broaden their opportunity set to other markets, they do not need to wait that long – valuation cycles exist for just about every market. This means ongoing opportunities to invest and diversify.

Full Report in PDF
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“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years”

Warren Buffet
We’ve been asked “Can you guarantee I’ll make money?” It is actually possible to “guarantee” a return but it requires one to have the right perspective.
Jan 2019 | 10min read
Find out more

“Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man”

Ronald Reagan
There is a simple way to beat inflation: grow net worth at a faster rate through wage growth. But wage growth stops when one stops working. There is a better way and it involves...
Jul 2019 | 5min read
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“In the short run, the market is a voting machine but in the long run, it is a weighing maching”

Warren Buffet
Emotional responses and the accompanying extreme pessimism and optimism generate market swings, creating opportunities for those who are process and evidence driven.
Jul 2020 | 5min read
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“What goes up must come down”

Isaac Newton
How do we keep our eye on the prize when it comes to investing and not lose confidence, especially when the going gets tough?
Jul 2021 | 5min read
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“History doesn’t repeat itself but it often rhymes”

Mark Twain
The inherent human psychology of wanting sure outcomes means that “waiting for the bottom can keep investors from making good purchases”
Apr 2020 | 10min read
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“The biggest risk of all is not taking one”

Mellody Hobson
Why am I not getting higher return despite taking more risk? Remember that the long term result will impose itself over time.
Oct 2020 | 7min read
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An investment in knowledge pays the best interest

~ Benjamin Franklin

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