“Our goal is to deliver the highest possible compound rate of return available to us.”
Work hard to avoid a checklist of biases gives a large advantage over untrained persons.
Knowledge compounds. Over time hard work turns into a widening advantage.
Key to increasing the probability of good decisions.
Let compounding do the work and avoid interrupting it unnecessarily.
For a compounding series, anything times zero is zero. Avoiding large mistakes is the key to compounding.
A necessary although not sufficient condition for outperformance.
When it’s trite, it’s right.
We adopt a deep-dive multidisciplinary approach to investing that exploit inefficiencies caused by rigid industry and country categorizaton, market cap categorization and investment time-horizon constraints. For example, it is increasingly harder to decide whether an automotive company should be categorized in the IT sector or industrial sector. Our multidisciplinary approach aim to exploit inefficiencies at the boundaries of analyst and portfolio manager coverage.
We promote rational decision making through open idea discussion and seamless information sharing. We embrace a collaborative decision making process – we believe good communication is key to good idea formulation, and putting everything under the sun with a team of open-minded individuals is one of the best ways to mitigate psychological biases.
A new idea entering the portfolio has to be better than the least attractive idea in the portfolio.
If an idea does not meet our minimum hurdle, we give it a pass. We dislike holding cash, but we dislike dumb ideas even more.
We prefer high probability events. We believe making a string of highly certain decisions rather than individual high upside-potential decisions is the key to maximise the long run rate of compounding.
The company must be trading at a large enough discount to intrinsic value to compensate for the vicissitudes of life and our errors in calculation.
We prefer continuity in earnings over near-term visibility in earnings.
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