The source of all profits in investing and the world at large is the hard work and ingenuity of people. As countries and continents become more interconnected, more people from all over the world are able to contribute more than ever to the global economy through their ideas, productivity and consumption.

Estimating the size and frequency of an asset class’s largest losses helps us find portfolio weights that can minimize the impact on a portfolio. We also look at multi-period returns (geometric average) in order to take into account the reduction in returns caused by volatility over time.

We also look for ways to improve the risk and return trade-off of the asset classes in which we invest. These can include passive indexing, alternative indexing, active managers, option strategies, or individual securities. While we believe that markets are generally efficient and that short term attempts to beat the market generally become unprofitable due to taxes and transaction costs, we also believe that there are factors such as company size and valuation that provide exploitable opportunities at low cost over the long term.