"The best lack all conviction, while the worst are full of passionate intensity." William Butler Yeats
Markets are mostly correct and mostly impossible to beat, and we think it's crazy to think one can outsmart the field. However, at critical turning points a majority gets locked into a belief that the future will be just like the recent past, and at these moments of predictable irrationality the disciplined observer has a chance to act boldly against the herd.
Observe without Bias
This anchoring is a powerful driver of behavior, and a major source of opportunity for those who can recognize and adapt. People tend to underestimate potential as trends begin, but overestimate after a trend has been in place. It's our job as a neutral observer to be a strong estimator of either true value or crowd sentiment. Lacking faith in both corporate numbers and our ability to outsmart the rest of the field, we choose to use market-based clues in search of opportunity.
Forecast Timidly, Act Boldly
We've tried our best to put our principles into images to more clearly make our case for capturing acceptable returns without taking unacceptable risk. We think the best spot on the curve is in recognizing when new business realities begin to overpower the prevailing bias. Not only will most still be looking in the rear-view mirror, but even those believing the new reality will be slow in acting on their new beliefs.
