A FEW KEY TENETS INFORM OUR INVESTMENT PHILOSOPHY
Value Investing Works
- We believe buying a few, discriminately chosen operating businesses at a discount to intrinsic value is a sound method for making money
- We believe buying businesses with a margin of safety protects capital
- Investing in a circle of competence can mitigate risk and enhance returns
Compounding Creates Wealth
- Compounding presents asymmetrical risks and rewards; we believe long term oriented investors should focus on harnessing its positive exponential payoffs and limiting its negative impacts
- A penny saved is a penny earned, but when investing capital for the long term, it can be far more
Volatility Is Okay; Permanent Loss of Capital Is Not
- Risk is the likelihood of incurring a permanent loss of capital and has little to do with how much an asset’s price fluctuates over short time intervals
- Drawdowns are a step towards impairment of capital, dilute buying power and should be minimized
- Leverage amplifies the negative impacts of drawdowns and we believe should be avoided
Markets Reward Progress and Are Biased Upwards Over Time
- Entrepreneurs and business owners are incentivized to pursue financial reward and create durable enterprises attendant with economic growth
- Americans’ desire to improve their fortunes makes continued progress likely over time horizons of sufficient length
“Investment is its most intelligent when it is most businesslike”
– Ben Graham