I suffer from common myopia (near-sightedness), a condition my optometrist says could easily be fixed with LASIK corrective surgery. I’ve been wearing glasses since high school and I’ve been consistently told I’m a good candidate for the procedure. The prospect of seeing clearly all the time is tempting. 

So why do I still hassle with glasses and contacts?  Because the optometrists I’ve seen throughout my life have one thing in common:

They all wear glasses.

I’ve had eye examinations long enough to know this isn’t a fashion statement: it’s a reality check. A chance to see how experts apply their hard-earned knowledge to their own lives. A time to watch not what people say, but what they do.

“Never ask the doctor what you should do. Ask him what he would do if he were in your place. You would be surprised at the difference.” — NASSIM TALEB, ANTIFRAGILE: THINGS THAT GAIN FROM DISORDER

In January of 2021 we authored “A Better Investment Journey” and the follow up “Nothing is Free''.  In the first piece, we propose an alternative to the core strategies used by most of the asset management industry and challenge the narratives that support them: “stocks for the long run,¹”  “bonds for diversification,” and “risk tolerance.” These are the building blocks of an industry of a scale the ophthalmic industry can only dream of: a “one-size fits any” solution for both manufacturers of financial assets (fund management firms) and asset allocators (brokers and advisors).

We set out to answer two important questions with our research: “what is the best way to compound wealth?” and “how can we improve the investor’s experience?” By augmenting “traditional” portfolios with proven institutional strategies, we were able to create something better on both counts: expected long-term returns at least in line with the historical performance of equities, but with lower risk and greater resilience in periods of market crisis than both stocks and typical “balanced” portfolios. 

An investor may own a well-diversified portfolio of stocks and still be vulnerable to inevitable changes in economic and financial conditions. Stocks tend to perform poorly during recessions and bouts of sustained inflation, and during periods of re-valuation–when euphoria gives way to realism or worse. Entire industries have been built on the premise that these gyrations can be anticipated and that tactical adjustments can be made to better ride the waves and sit out the storms. Our solution is different: a balanced portfolio with meaningful diversification, one that adapts systematically to changing conditions and can even benefit from the conditions that are most harmful to conventional portfolios. We rely on preparation rather than prediction.

Being different isn’t free. For us and for our clients, one cost is the time and effort required to understand the key features of strategies unfamiliar to many individual investors.  A portfolio that is different may perform better over time–even most of the time–but different should always mean worse some of the time. In our piece “Nothing is Free,” we examine the historical conditions under which our strategy would have underperformed a conventional portfolio in the past, and invite the reader to contemplate their choices today. To the question “what should I do?” we offer evidence for the better answer: “here’s what we would do.” These are the glasses we wear.  

¹ Jeremy Siegel, “Stocks for the Long Run”, 6th edition (Macgraw Hill. 2022)