The following are a few of the fundamental investment opinions we have accumulated through years in the industry, which inform our investment philosophy and help shape our view of global markets.
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1 Someone always wins.
Someone is always taking the other side of your trade. What do they know that you don’t?
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2 Markets are not efficient.
The markets are made to be taken advantage of, not to be persuaded by.
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3 The markets are manipulated.
Never forget that the government always wants the market to go up and that the further the market goes down the more manipulated the market becomes.
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4 Know your enemy.
Wall Street is more concerned with putting money in their pocket than putting it in yours.
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5 Cash is king.
Cash is a great place to invest when you don’t have a good reason to risk capital.
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6 This time is never different.
If someone tries to convince you otherwise, back out of the room with your hand on your money.
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7 Make change your ally.
Every investment system or model will eventually become obsolete.
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8 Focus on the present.
Understanding the present is more important than predicting the future.
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9 Leverage can make bad decisions worse.
Leverage reduces your ability to make non-subjective investment decisions.
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10 Understand your weaknesses.
Controlling your emotions and avoiding previous mistakes are the essential ingredients for investment success.
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11 Sell high and buy low.
The human condition makes it more difficult to sell what’s going up and buy what’s going down.
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12 Short positions decrease correlations.
When volatility increases, everything becomes correlated except a short position.
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13 Expect the unexpected.
Always leave yourself a margin of safety to protect against unexpected outcomes.
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14 Less is more.
It is always better to win a bunch of small bets than one big one.
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15 Don’t expect a different result.
History doesn’t always repeat itself but it rhymes very closely.
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16 Bonds don’t always go up.
Stocks can trend for years while interest rates trend for decades.
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17 Learn from your mistakes.
Failure can be a great learning experience but only if there is reflection on what went wrong.