1st Discipline – Holding Periods

On average, the equity markets for any given asset class make a full up-and-down cycle every five years. That means an investor should remain in an asset class for a full five year cycle in order to achieve its highest high or recover from its lowest low. If THE HERD frequently bails when in an emotional state of mind, there is a tremendous likelihood it’s buying high and selling low. If they sell, and you hold, who’s left holding the bag? Most investors don’t realize the degree to which they are commingled with and impacted by the emotional, short-term nature of THE HERD’S decision-making patterns.

That is why our first discipline is HOLDING PERIODS. We ask that any investor or institution who joins our system remain committed to a five-year HOLDING PERIOD.

WHO’S REALLY MANAGING YOUR MONEY?

We interview and hire our own managers – not the managers of a large institution. Most are owners of their own privately-held firms. There is no subjective middle man – no “manager of managers”.

We carefully research their buy and sell disciplines. We ensure that our portfolios are only commingled with those investors who have the same HOLDING PERIODS and the same risk tolerance. We monitor their capacity. If they ever reach a point of critical mass – meaning it will take more than five days to liquidate their largest holding without negatively impacting the price of the stock – we choose to no longer work with that manager.