Taken from the Hippocratic Oath, all first-year medical students quickly learn to, first and foremost, Do No Harm to their patients. As a physician, this has been the basis of my practice and has guided my pre-procedure discussions of risk versus benefit with thousands of patients. Judging when to act and when to relent requires much wisdom, current knowledge, humility and a true assessment of both the patient’s condition and the doctor’s ability to perform.
At Vailshire Capital Management, LLC, we believe the best fund managers possess similar attributes. That is, all investment possibilities begin—and end—with risk. Benjamin Graham’s famous Margin of Safety principle should be at the heart of any asset evaluation, be it stocks, bonds, housing, land, commodities, options, or the like. Clients whom entrust their assets alongside ours can rest assured that our primary strategy is to decrease risk to acceptable levels and, put simply, to never lose money. While minor losses are inevitable, catastrophic losses should be anticipated and hedged against.
Fundamental analysis is always performed, with a constant search for assets that are selling at bargain prices or, conversely, those that have run-up to unreasonably expensive levels. Individual securities within markets, or entire asset classes, will occasionally become relatively over- or undervalued based upon political, social, macroeconomic and/or microeconomic events. Staying current and learned in each realm is necessary to forecast such events, anticipate their effect upon different asset classes, and be ready to make necessary investment decisions for minimum losses and maximum profits.
Once risk is controlled and underlying value is established, final investment decisions will be based upon the potential for future growth—generally over the mid- to long-term. This means that current, transient trends may be ignored to establish positions that are expected to pay handsomely over the next several years and decades. To illustrate, we look not for the titillating grass that sprouts today and is gone tomorrow. Rather, we search hard for the established sapling that will one day become a mighty redwood in a forest of lesser trees.
Investing well is an ever-changing journey, requiring agility and adaptation to not only survive, but to thrive. While most funds cannot even keep pace with traditional indices, Vailshire intends to show the turbulent markets and watching world how wise, disciplined, value-based and growth-oriented investing can lead to peaceful todays and prosperous returns tomorrow.
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