At 412 investments, we believe that if we treat others well, we will do well. If, as investors, we can help companies get the capital they need by buying their stock and improving their stock price. In response, the companies will try to raise credit, improve their processes, and increase their profits. That, in turn, will raise the value of their stock, leading to a profit for investors. Thus, our goal is to find the companies that most need that money. Those companies will return the best profit.
What is in it for you? Sustainable growth. It is not sustainable to grow your investments if the companies are not profiting as well. On the flip side, companies that are increasing their profits because of your investment… will create a virtuous circle of profits, so long as all sides are honest. This can grow faster than we have seen in the past, so long as those who need the most investment get it in a timely fashion and use it to recover from a loss or grow larger gains.
For your investments, to help you “beat the market” consistently and sustain-ably over time, we simply need to find and invest in honest companies who need the money. That is what an investment algorithms should target.
Our Philosophy is Simple, but it Works!
Look around you, is the world simple or complex? It is made of people, who mostly act simply. This simplicity comes from simple rules we enforce together as a society of humans. Yet, a human’s brain is the most complex things in the universe! Why is this? It is because the ultimate truth of the universe is simple.
But that simple truth, reflected in every way a billion times over, gives rise to unimaginable complexity. That complexity is what is behind the complexity in life, the universe, and the stock market. Everybody in the market, from the stock holders to the companies that issue stock, seeks to make a profit. Profit is neither good nor evil. Because “profit” makes us the money we need to buy food, we all need to “profit” just to eat. Every penny in the market boils down to food. It is abstracted away into currencies and securities.
In nature, every living thing is seeking to make a “profit” by eating more food than it needs to survive and reproduce. In the stock market, the terms change but the goal remains the same. My philosophy is that we can use computers like ploughshares, algorithms like harvesters, and band together to build a community to improve the world – through realizing the simple truths. Companies are happy to be given the nourishment they need – credit and cash – to continue to make a profit. Investors are happy to take a share of future earnings of the companies. If we work together, we can all achieve our goals together, it is to our detriment to harm the companies in which we invest, for it is their profits that we seek.
Going down the allegory further, remember the bulls and the bears. The bulls will come down and graze on the growing green field, growing strong and numerous. But if the field withers, the bears come down. They aren’t there to eat the grass (which is like the stocks and bonds being traded). They come to eat the bulls!
If we are wise, we will be like men who farm the bulls and cows, maintain and care for the grass… and chase away the bears. By successfully investing in companies, we can find companies that need just a little more capital, like a plant needing sunlight. You, me, and the companies, working together, can treat each other the way we should treat each other.
Together, all can benefit from a prosperous harvest.