5 concepts that help us guide you 

“Some necessary things I’ve learned in 50 years”        

Based on his 50 years of experience in the financial services industry, our Senior Partner, Bill Berner has developed these five philosophical/strategic points that serve as the foundation for the work that Sand Creek Investment Partners does on behalf of our clients. Bill originally wrote these five points for his personal use, but since that time, they have come to serve as our firm-wide professional guideposts.

1.No one can predict the future, even if they claim such an ability

I cannot accurately predict what will happen in the financial markets for the next year or two with any of the level of certainty that would be necessary to be useful. Nor can anyone else. A few people have superior insight into the possibilities—as well as the judgment to use that insight—but most prognosticators are just guessing when they predict the timing of future events, and sometimes guessing with a bias or an agenda. 

The best I can do is understand the current environment, its historical and future implications, and some of the future’s possibilities—all while having strategies to steer us forward. Don’t try to know something that is unknowable. Don’t look to someone else to know the unknowable.

2.Attach your capital to long-term up trends, but know there will be uneven results along the way

Assets such as equities and income real estate have long-term, established up trends that have endured for many decades. Given the desire of most humans to improve their circumstances and make upward progress, such up trends are understandable. We see such trends in many aspects of human civilization. As William Shakespeare wrote in Julius Caesar, as he described the need to take advantage of opportunity: “There is a tide in the affairs of men / Which taken at the flood, leads on to fortune.” 

However, in spite of the words of the bard, the short-term performance of these assets can be very “lumpy” when traversing the long path upwards, especially for equities. The highs and lows of annual performance are vastly more volatile than the “average” returns over long periods. It means investors need to come to this realization: “I MUST attach my capital to these assets with long term up trends, but WHEN I do that, and HOW I do that will have significant impact on the results.”

3.Individual temperament may be the most important factor in investing

Individual temperament is as important to investment success as knowledge and experience in accounting, psychology, business and financial markets. Temperament might be more important than all of them. A few individuals may be born with certain temperament tendencies that are helpful, but even those rare individuals must develop “trained responses” (a term used by Charlie Munger of Berkshire Hathaway) in order to function effectively in the markets. 

In subtle and not so subtle ways, the financial markets use our natural tendencies against us. These instinctive human reactions have developed over eons of time and are not easily altered. Yet, I must spend as much time as necessary on recognizing my temperament and developing trained responses to the markets in order to temper my decisions and maintain my peace of mind.

4.Change is constant, but remember, in many ways, so is the up trend (see #2)

Change is always upon us and the markets. Change is continuous, and never ending. While cycles continue their unending repetitions in new and different ways, I suspect the future will have remarkable similarity to the past for the markets. The markets will rise and fall, discounting the present and attempting to discount the future. Amidst all the change, it seems likely the trends of # 2 will continue. Without belief in that premise, there can be little conviction, and without conviction, there can be no serious commitment to long-term productive investment.

5.Expect contradictions and frustrations, but proceed with discipline and conviction

Much of the above contains contradictions & frustrations; constant change & similarities, cannot know and must have conviction, long term up trends with very lumpy short-term results, the importance and difficulties of timing, cycles & rhymes. Successful investors manage to work this reality into useful and repeatable strategies that produce satisfactory results over time. They then execute those strategies with discipline, conviction, and courage.

Interested in exploring these ideas with us? Want us to elaborate? Let us know—we’d be happy to speak with you.