Our Strategy centers around a few key Ideas: Barbell, Buy and Hold, Hedging, and Concentration vs Diversification.
The Barbell Strategy consists of putting investments on two sides: a very safe one, and a more aggressive one. When the market declines, the “safe” positions increase and help offset the declines on the “aggressive” side. In reverse, the same holds true.
Buy and Hold is employed because it’s very difficult to correctly time an investment. In addition, holding an investment over a year helps reduce taxes.
Strategic hedging helps us manage risks, especially as it relates to macro-economic concerns. We utilize this whenever we believe it will help us reduce overall market risk.
Within our two “foundational” model portfolios (Fort and Cinder), we utilize
diversification to reduce volatility and risk. With our moderately aggressive
model portfolios (Ibis and Goodwin), concentration in our best ideas is the
best way to outperform the market.