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Research

Research is the foundation of investment success

All great long-term investment strategies are built on the foundation of great research. The research that resulted in our Super-Diversification investment strategy took decades to do and was done entirely by our founder Mark Patton.

It’s unlikely you’ve ever met a research geek as passionate about his work and the impact it can have on you as Mark! Not only is he an investment geek but he is also a computer programmer. The combination of these two skillsets allows Mark to do research that tends to be far more efficient and comprehensive than many others.

There are many ingredients required to conduct valid and useful research when developing an investment strategy. Some of those key ingredients are the following:

1) Lengthy time period

a lengthy time period must be tested so that the research covers a variety of market conditions. Research that only considers a short period of time has a high risk of failure during longer periods of time. Mark gathered data, much of it dating back to 1962, from a wide variety of sources. He then incorporated all of this data into a proprietary computer database that serves as the foundation of much of his research.

2) Consistent strategy implementation

the same strategy must be implemented over the entire testing period. Problems occur when a strategy has to be “tweaked” to work during one period and “tweaked” a little differently to work in another for example. The investment strategies Mark has developed maintain consistent disciplines during the multiple decades of time covered in the research demonstrating their potential for long-term success through many different market environments.

3) Logical investment disciplines

an investment discipline must be based inherently on good logic to have a reasonable probability of being successful long-term. For example, a strategy based on which team won the Super Bowl may have worked historically but is not based on any logic that would suggest it will work in the future. Mark’s investment strategies are all built around proven mathematical principles and basic well-documented human behavior.

4) No strategy works best all the time

great long-term investment strategies will always go through shorter periods of time when they don’t work best. This is a simple reality of investing. Research can help us understand when to expect a strategy to work better or not. Mark’s strategies certainly do not produce the best returns during all shorter periods of time. His strategies have been designed to position investors for great long-term performance knowing and having the confidence to weather through some periods that will be disappointing.

Knowing where to focus research efforts that may have the greatest potential to add long-term value for clients as well as utilizing sound research principles typically requires decades of experience such as Mark has.