INVESTMENT PHILOSOPHY

“The plural of anecdote is not data”
Marc Bekoff  

Confidence, Inspired by Evidence

We believe that it is important for an investment firm to stand for something. At ReSolve Asset Management, we stand for a set of core ideas that inform and infuse every solution that we offer. These beliefs run through the veins of our founders and every member of the ReSolve team. We state them openly here so you know what to expect from us. Go ahead, hold us accountable.

 

WE ARE THE RIVER

We are the river

The river doesn’t expect the earth to change to accommodate its preferred direction. It flows where it must, constantly adjusting to curves and obstacles, never knowing what is around the next corner, but always knowing that it will reach the ocean. Similarly, we at ReSolve hold no view about how the world should work. No ideology to cloud our logic, no narrative to bias our judgment. Like the river, we accept that we will rarely know the trajectory of our path in advance. Rather, we flow and adapt, comfortable in our process, never attempting to flow uphill.

We don’t know

The French philosopher Voltaire said “Doubt is not a pleasant condition, but certainty is absurd.” Unfortunately for investors, global markets are wildly unpredictable. In fact, markets are members of a class of systems that are notoriously resistant to the type of cause-effect relationships that dominate most other human experiences. Still, to maintain the illusion of control, most investors can’t help but try to fit a story to market behaviour. Unfortunately, these stories are usually unhelpful, and instead make investors reluctant to change their views as the facts change. By acknowledging ambiguity and moving with the markets rather than fighting them, we can flow and adapt in real time to whatever they have in store.

EAT FREE LUNCH

Eat the free lunch

It seems like every study that analyzes real investor portfolios concludes the same thing: investors are profoundly underdiversified. More specifically, investors dramatically overweight their home country stock market, and ignore opportunities in international markets and non-correlated asset classes. This is unfortunate, as investors have an opportunity to earn similar returns with less risk, or higher returns with the same risk, through more thoughtful global diversification. At ReSolve, we start with global diversification in order to “eat the free lunch.” More active mandates also prioritize diversification, and allow us to move toward concentrated bets where the odds are skewed substantially in our favour.

Process trumps outcomes

The hardest part of investing is that an individual’s own experience in markets offers almost no information about how to make decisions. Markets are too noisy, and observation horizons are far too short. Rather, investors must rely on a thorough understanding of what drives asset returns through time, and across different market environments. Once these dynamics are understood, long-term investment success is purely a function of repeatedly making smart, diversified investments where history suggests we should expect to be rewarded. While no process shines all the time, investors who confidently stick with an informed process through thick and thin are most likely to reach financial Nirvana.

PROCESS TRUMPS OUTCOMES

One risk to rule them all

Academic finance would have you believe that market volatility is the only risk that matters, while many value-oriented investors argue that risk is not having a fundamental ‘margin of safety’ on your investments. At ReSolve, we believe that the only risk that matters is the risk that our clients won’t meet their financial goals. For investors with regular cash-flow needs and finite investment horizons, risk often dominates returns in terms of likely investment outcomes. At ReSolve, we target the right mix of return and risk to hit your financial targets.

As ships crossed ancient oceans, they relied on the stars to show them the way. With a clear heading and a good crew, these vessels forged new paths and opened up whole new worlds to discovery and enterprise. At ReSolve, we believe that with a strong team and clear principles we are equipped to navigate tomorrow’s oceans of opportunity. We look forward to welcoming you aboard.