Successful investing requires a clear and consistent set of beliefs about how capital markets work. Here’s ours.
Our Philosophy of Investing
Through years of rigorous academic study, experience, and observation, our team at Concentus has developed and refined an investment philosophy to help our clients excel. Our philosophy is made up of ten core concepts, which we refer to as the “10 Pillars” of our investment philosophy.
1. Markets are rational.
Over the long term, capital markets are rational and are guided by specific principles. Emotions are what cause most investors to believe that markets are ruled by chaos and unpredictability, when in fact the short-term chaos is part of a larger order, which is rational and understandable.
2. Successful investing requires a long view.
All prudent investing must begin with a long-term time horizon in mind. Successful investing requires patience and discipline, both of which require a “long view.” We believe that we are investing for a lifetime, or even over several generations. Investing success must be measured over years, not months or quarters.
3. People underestimate how long they will live.
You are going to live a long time. Invest accordingly.
4. The only real definition of “money” is purchasing power.
We must protect against the eroding power of inflation. Currency inevitably loses some of its purchasing power every day due to inflation.
5. Equities are better than anything else.
Equities, or the partial ownership of the great companies of the world, have been more effective than cash, bonds, and other fixed income investments at preserving and enhancing purchasing power.
6. Equity returns are a function of equity volatility.
To pursue higher returns, you must accept volatility.
7. Investor behavior is a risk.
The long-term risk of equities is embedded in the emotions of the investor – not in companies or even the global economy.
8. The economy, markets, and future performance are impossible to predict.
Nobody can consistently gain an edge over the market by making decisions based on current events.
9. Uncertainty is the only certainty.
The world is in a constant state of instability. We must achieve rationality under uncertainty.
10. Optimism pays.
It is not possible to make a good investor out of a pessimist.
The Most Important Factor In Your Success
While most people believe that investment performance is the most important determining factor in long-term success, it is our belief that investor behavior is the dominant, real-world factor in our clients’ success over time. Our true value as a financial advisor is to act as a behavior coach for our clients. No black boxes and no magic performance formulas. Just planning and behavior management, which are likely to be worth multiples of their cost over time.