Investment philosophy
Compounding the important things in life
The reason why we invest with a long term horizon is because we want a permanent future that is better than the present, rather than a portion of an ephemeral joy that expires in minutes. The actions taken yesterday live today and will in the future.
Avoidance of risk of ruin
The Fund’s objective is to create the highest possible return with a low level of risk. Low risk is understood as the avoidance of permanent loss instead of volatility. We are looking at the downside and protecting against big losses before looking at the potential upside.
Embracing positive outliers
Finding convexity and optionality, investment opportunities with a limited downside and non-linear high potential upside
Always expanding the circle of compentence
Constantly increasing our knowledge and remaining open-minded without attaching any labels to ourselves
The three pillars of investing
Our investment philosophy is based on three central pillars which form the foundation of all our decision making.
Behaviour
Understanding oneself and behaving well is the most important factor to generate returns over long periods of time.
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“One of my competitive advantages as an investor is that I can control how I behave, and I know that if I behave a little bit better than the rest, the compound effect over time will be enormous. I am committed to it.”
2018 Annual Letter
The mathematics of the market
Knowing the rules of the market allows us to make the portfolio as antifragile as possible. Understand convexity and fragility.
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“I am an investor and only care about what the company is doing, but knowing the rules of the markets ensures I do not leverage; I evaluate the asymmetries of the positions and try to constantly be exposed to a level of risk that allows me to survive if a real crisis occurs.”
2018 Annual Letter
Real-world business experience
“Just because we (investors) own some shares of a company, we really have not earned the right to evaluate and direct a management team. Having practical experience creating and managing a business has made us become more candid and patient towards management teams. It also highlighted the importance of great, confident, yet humble people as the most critical success factor.”
2018 Annual Letter