mantle

The Investment Philosophy and principles practiced at SKS Capital draw inspiration from “The Tao of Investing: the ten tenets of my investment creed” by James Montier, noted global strategist at GMO.

Tenet I – Value, value, value. Value investing is the only safety first approach. By putting the margin of safety at the heart of the process, the value approach minimizes the risk of overpaying for the hope of the growth.

Tenet II – Be contrarian. Sir John Templeton observed that “It is impossible to produce superior performance unless you do something different from the majority”.

Tenet III – Be patient. Patience is integral to a value approach on many levels, from waiting for the fat pitch, to dealing with the value managers’ curse of being too early.

Tenet IV – Be unconstrained. While pigeon-holing and labelling are fashionable, we are far from convinced that they aid investment. Surely we should be free to exploit value opportunities wherever they may occur.

Tenet V – Don’t forecast. We have to find a better way of investing than relying upon our seriously flawed ability to soothsay.

Tenet VI – Cycles matter. As Howard Marks puts it, we can’t predict but we can prepare. An awareness of the economic, credit and sentiment cycles can help with investment.

Tenet VII – History matters. The four most dangerous words in investing are “This time is different”. A knowledge of history and context can help avoid repeating the blunders of the past.

Tenet VIII – Be skeptical. Learning to question what you are told and developing critical thinking skills are vital to long-term success and survival.

Tenet IX – Be top-down and bottom-up. One of the key lessons from the last year is that both top-down and bottom-up viewpoints matter. Neither has monopoly on insight.

Tenet X – Treat your clients as you would treat yourself. Surely the ultimate test of any investment is: would I be willing to invest with my own money?

 

 
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