BLOG: Investment Beliefs
“What are Beliefs Anyway?” - JJ Mueller, Chief Investment Officer
Klaraos maintains a straightforward approach to investing, whether it be short, intermediate or long term. It starts with a Fundament Assumption:
You Get What You Let the Market Give You
It’s true, for the most part…and the most part IS the most part: It’s tough to take from the market, so we ask you to consider a belief in just…receiving
“Beating” the Market is a very substantial challenge, especially if your definition of “the Market” is what the “news” reports. The media is fond of reporting “indexes”, specifically and most frequently, when speaking of equities, the Dow Jones Industrial Average, the S&P 500 and the NASDAQ Composite. Index values are all fine and dandy. And they are not strictly “investible”. The indexes as reported in the media are the valuations of their component stocks, weight-averaged by market capitalization
Actually investing in indexes, versus simply reporting them, has costs associated. Even the most cost-effective index “funds” return less than the “cost free” index values reported in the media. “Beating” the Market in a BULL market presents additional challenges. As it’s been said, “a rising tide lifts all ships”
So, what is a stock-picker to do? Pick the ships that sail faster? It’s a tall ship’s order. Historically, only the very few, very best, investment professionals have ever been able to “Beat the Market” successfully over any appreciable length of time (and your lifetime IS appreciable). Are you the very best? Would you even believe me if I said I was the very best? This is the MAIN REASON investment management, portfolio management… investment DECISION MAKING, has become a commodity. And in that commodity space…Artificial Intelligence is proving itself to be at least equal to historical human investment decisions. It’s not that “stock picking is dead”, it’s just that when to buy what, and when to sell what, is proving to be best left to emotionless computer programs. Those computer programs still need to be defined and designed by Human Intelligence. Be wary of those who say THAT function is a commodity. Klaraos doesn’t “think” that we are quite there yet, so we have invested heavily for YOU to make sure AI works for YOU
“Beating” the Market in a BEAR market is quite another endeavor. If a “falling tide lowers all ships”, then here’s one strategy: pull your ship out of the water and it won’t run aground. Of course, the “all cash” position carries other risks, like inflation risk, and the risk you won’t reach your goals. The Klaroas AI-based system (discipline) seeks to identify when the entire market is subject to decline – a lowering tide – and attempts to identify opportunities to “sail above sea level”. In a Bear market, the fund that is zero is a hero against indexes that have corrected down 10%, 5%, or even just 3%
What are You, a LIFE Planner, to do?
The Klaraos Philosophy includes a safeguard against popular temptations:
Don’t try to “Beat the Market”, Don’t even Think about the Market
Instead, think about your REAL goals, not comparing yourself to anything else. Answer the questions: Where do I want to be? Where do I need to be? What is it going to take to get there?
The answers will provide you with ACHIEVABLE goals and SUBSTANTIAL results that are far less elusive than “Beating the Market”
Specifically, Klaraos focuses on compounding your returns while minimizing volatility. Why? Because being way “up” one year is great…unless you’re “down” a bunch the next. Being “up and down” can cause you to make decisions in the moment that are influenced by the moment. If you change your Plan, or your current feelings change about your position (strong/weak, relative health, etc.) based on that moment, you may experience real “swings” in your lifestyle…and your sense of security. You may feel you’re living in Chaos