the ground rules

We encourage and expect investors to review the below investment guidelines at least annually so that they know what they are getting into.

  1. We try very hard not to predict anything. Not the market. Not Interest Rates. Not government policies. Not stock performance. The only thing we guarantee to predict is that we will make disciplined investment decisions and work in our partners’ interests.
  2. We do not care how markets price securities. We have our own methods to determine appropriate prices and margins of safety. We do not rely upon technical analysis. We also prefer longer holding periods (see Rule 5 below).
  3. We define risk as ‘a shortcoming in our analysis’. Therefore, risk is not being aware of something that we should know about a company. We do have risk in our portfolios, but we try very hard to stick to easily understood businesses to reduce our risk.
  4. We must keep our investment ideas mostly private. Our process may involve accumulating large stakes of companies. This rule allows us to get the lowest possible prices while we are buying securities as well as provide many additional options in the future, including acquiring uninhibited ownership stakes.
  5. We consider 3 years (minimum) an acceptable holding period. Many of our positions may be held longer. Our clients are encouraged from day one not to mistake short term performance for long term gains. Therefore, our portfolio may bounce around more than an index, but long term, we seek to outperform.
  6. We strive to maximize performance. However, outperformance is increasingly difficult each and every year as markets become more efficient. Our goal is to return 8% per annum or beat our benchmark by 5%. 
  7. We strive to keep our fees aligned with the preferences of our partners. Currently we have structures that are subject to change. The changes we anticipate our not based on whims, but are based on simple laws of supply and demand. As we see it, there is no shortage of investment managers and the uptrend will likely continue.

3065 Rosecrans Place #203

San Diego, CA 92110

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