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OUR PHILOSOPHY

 

Successful Investing


Successful investing is directly related to a powerful conviction in a well-defined and considered investment approach or strategy. The two crucial components that crystalize any successful investment strategy are the investment philosophy and the investment process. This is why investing is often described as a combination of art and science – philosophy being the art and process being the science. The lack of either philosophy or process may result in speculation and ultimately frustration.


For an investment to succeed, the applicable philosophy and process need to be inextricably linked to entrench stability – the philosophy being stable and rarely (if ever) changed and the investment process being methodical, considered and repeatable with a constant commitment to improve.


Ultimately successful investing is the same as successful living - based on strong principles (philosophy) and continuously improving actions (process) as a result of increased development and experience.


The Ampersand Philosophy and Process


The Ampersand team has extensive experience in dealing with private individuals on their unique investment requirements. This means that the people interacting with individual clients are the same people making the investment decisions. Several players in the field of investing consider their track record, the size of their balance sheet, market positioning and/or degree of tertiary qualifications that exist in their business of primary importance. This is not our core focus. At Ampersand we recognize that for any investment approach to succeed, the end investor needs to have confidence in the approach. Without this the probability of success is greatly reduced. Therefore we believe in keeping our strategy simple and clearly defined.


At Ampersand our Philosophy is outlined by 5 key concepts:


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Never lose money

Real wealth is created through consistency and by avoiding permanent value destruction. Consideration of the risk of capital loss is of greatest importance to us when implementing investment decisions.

 

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DIVERSIFICATION IS THE ONLY “FREE LUNCH”

The probability of achieving consistent returns will be significantly enhanced through effective diversification. Diversification occurs at various levels and includes geographical diversification, industry diversification, asset class diversification, and finally manager diversification (ensuring exposure to different styles and skill sets).

 

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IT’S ALL ABOUT VALUATION

Thirdly, encompassed in our search for consistent returns, is a disciplined focus on asset class valuation in the context of prevailing market conditions. This is achieved through maintaining a perspective of the long-term value of different assets in both absolute and relative terms. We believe that generating good returns from any asset requires patience, discipline and resolve.

 

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MARKETS CHANGE CONTINUOUSLY, WHICH MAKES PERSPECTIVE CRITICAL

In our drive to better understand volatility in markets, we subscribe to the Adaptive Market Hypothesis (“AMH”) which attempts to reconcile economic theories based on the Efficient Market Hypothesis with behavioural economics. AMH reinforces the view that investor emotion and other behavioural bias create disparity in asset valuations, which in turn create significant opportunities for active asset allocation and manager style rotation.

 

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CONVENTIONAL WISDOM DOES NOT EXIST – INDEPENDENT THINKING IS REQUIRED

Conventional thinking, we believe, is one of the largest contributors to significant value destruction, as logical thinking becomes overruled by emotion and “herd” mentality. This is particularly true in periods of extreme fear or optimism. During these times, the majority of investors base decisions on predictions and market consensus forecasts. We focus instead on logical and considered measures of value and our confidence in manager skill and portfolio structure.

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