OUR MISSION
To provide our clients the greatest sense of financial security possible.

We implement a truly unique approach to investment management because we have a truly unique investment philosophy. The following are our core beliefs that set us apart from mainstream portfolio management firms.

Belief #1: BE HUMBLE
Belief #2: BE COURAGEOUS
Belief #3: MINIMIZE MISTAKES
Belief #4: VALUATION MATTERS
Belief #5: MARKET CYCLES MATTER
Belief #6: ACTIVE MANAGEMENT ADDS SIGNIFICANT VALUE
Belief #7: ABSOLUTE RETURNS PROMOTE WEALTH PRESERVATION
Belief #8: OVER-DIVERSIFICATION IS OVER-RATED
Belief #9: QUANTITATIVE ANALYSIS WORKS
Belief #10: TECHNICAL ANALYSIS WORKS

Belief #1: BE HUMBLE

A proud peacock one day, a feather duster the next
- Coach Rick Barnes, University of Texas Men’s Basketball -

One of the common denominators of all great investment managers is humility. The humble persona of Warren Buffett and Jim Rogers is strikingly different than run-of-the-mill securities analysts. A humble spirit is critical to success in investing as it allows us to:
1. Put the interests of our clients first.
2. Maintain an objective outlook minimizing emotional or irrational decisions.
3. Learn from our mistakes.
4. And most importantly, learn from others.

Belief #2: BE COURAGEOUS

You cannot beat the crowd by joining them.
- Anonymous -

Nearly every time I strayed from the herd, I’ve made a lot of money
- Jim Rogers – pg xvii, Hot Commodities -

If you join the crowd, you have a much higher risk of being trampled.
- Warren Buffett – pg 214, The Essential Buffet -

“Buy Low, Sell High” is perhaps the best known truism in portfolio management – but, unfortunately, it’s much easier said than done. The reason why a security is priced cheap is because the demand for it is low – in other words, nobody wants it. It takes courage to go against the crowd and buy a security that nobody else wants. It takes even more courage to be patient with an undervalued security until other investment managers see value in it.

The majority of portfolio managers buy overvalued investments that “have performed well historically” because there is “comfort in the crowd”. Unfortunately, for the crowd, this leads to buying high and selling low. We aim to be courageous in pursuing non-consensus investment themes. We are confident that utilizing unconventional portfolio management strategies based on value-driven investment principals will result in superior risk-adjusted returns for our clients.

Belief #3: MINIMIZE MISTAKES

George Soros’ willingness and ability to take a loss is legendary. Many believe that his genius is not in recognizing high return investment opportunities as it is his ability to minimize losses by liquidating loosing trades.

We believe that investing is not about avoiding mistakes, but rather minimizing them. Of course, the first step in minimizing a mistake is to recognize it. It takes humility to recognize a mistake and then it takes courage to act. Too many portfolio managers operate under the false belief that admitting mistakes will result in a loss of confidence but we’ve found the contrary to be true.

Belief #4: VALUATION MATTERS

That’s how my mother invests!

Jim Rogers in response to someone who was recommending an
over-valued stock that had just hit a 3 year high.

Humans are psychologically hardwired to chase investments that have already produced superior returns even when those investments are over-valued. This is an unfortunate truth that most investment managers would deny as they too are guilty of it. Long ago, the sales machine at investment management firms learned it was much easier to sell a portfolio of investments that had performed well yet are overvalued versus selling a portfolio of undervalued securities that had greater potential.

Valuation is at core of what determines whether an investment has positive or negative risk-return characteristics. As prudent portfolio managers, we focus on undervalued assets which provides our clients a greater margin of safety.

Belief #5: MARKET CYCLES MATTER

History rarely repeats itself, but it often rhymes.
- Mark Twain -

Too many investors are so overcome by emotions of greed and the noise of the moment that they ignore the lessons of history.
- Larry Swedroe – pg 257, What Wall Street Doesn’t Want You to Know -

Capital markets tend to move in 15-20 year secular (long-term) cycles. Since 1900, the U.S. stock market has enjoyed 3 secular bull cycles that were characterized by superior returns and endured 3 secular bear cycles that were characterized by lackluster returns. In each of the secular bull cycles, P/E ratios peaked in the low 20’s and in every secular bear cycle, P/Es bottomed in the 6-8 range. Bond, Real Estate and Commodity markets tend to experience similar cycles.

We believe that we are in the “middle innings” of a secular bear market for U.S. stocks which began in 2000. While the worst may be over for US equity markets, the next several years could still prove challenging for investment managers who implement a buy and hold strategy consisting of equities and bonds. Because the climate for securities is different today than it was in the 80’s and 90’s, we maintain that successful portfolio management must take a different approach as well.

Belief #6: ACTIVE MANAGEMENT CAN ADD SIGNIFICANT VALUE

In any sort of a contest – financial, mental, or physical – it’s an enormous advantage to have opponents who have been taught it’s useless to even try.
- Warren Buffett – pg 158, The Essential Buffett -

Portfolio managers who subscribe to index investing strategies contend that active investment management is an exercise in futility since 70% of active investment managers under-perform their benchmark indices. This claim is about as insightful as saying that the average record in the NFL this year will be 8-8. The market is a “zero-sum game” in which, for every winner, there is a loser. When you tack on fees, commissions and expenses, the average investor has to lose to the market.

However, we believe that it is possible to consistently be on the “winning” side of the market by avoiding investment fads and bubbles and maintaining a disciplined, rational, valuation-based investment management strategy that will add significant value to our clients’ portfolios.

Belief #7: ABSOLUTE RETURNS PROMOTE WEALTH PRESERVATION

Offense Wins Games - Defense Wins Championships!
- Anonymous -

Absolute Return investment strategies seek to deliver positive returns regardless of market direction. Our primary objective is to preserve wealth which begins with managing risk versus the more popular method of seeking returns with little regard for risk. Few investment management firms have a true understanding of the impact of market volatility on an account that is generating income for a retiree. We strive to achieve positive “absolute returns” through tactical allocation strategies and by focusing on undervalued securities.

Belief #8: OVER-DIVERSIFICATION IS OVER-RATED

Diversification is a protection against ignorance.
- Warren Buffett -

A certain degree of diversification has its place in any portfolio. However, most portfolio managers take diversification to the extreme. Investor management firms have a propensity to over-diversify for the purpose of self-preservation.

Due to transaction costs and investment fees, over-diversification inevitably leads to underperforming the market on a consistent basis. Conversely, we welcome the challenges of a focused strategy and accept accountability for our results.

Belief #9: QUANTITATIVE ANALYSIS WORKS

Irrationality creates enormous opportunities for those who have the ability to resist it.
- Paraphased from MoneyBall by Michael Lewis -

Billy Beane, GM for the Oakland Athletics, is perhaps one of the best known Quantitative Investors. He used quantitative techniques to find undervalued baseball talent which has resulted in one of the best winning percentages in all of baseball despite a payroll far below the league’s average. The A’s wins/payroll ratio far exceeds any other club in major league baseball. Our goal is to Quantitative investment tools to find undervalued securities which will result in greater returns per amount of risk taken.

Quantitative Analysis is the use of computerized models that identify inefficiencies in the market. This type of analysis is valuable because it is completely objective eliminating emotional errors in managing a portfolio.

Belief #10: TECHNICAL ANALYSIS WORKS

It’s impossible to predict the behavior of a single individual; however, it is easy to predict the behavior of a group of individuals.
- Dr. Kenneth McFarland -

The market is made up of individual investors who collectively behave in fairly predictable ways. There are quantifiable methods to measure historical market behavior which can be useful in determining the probabilities of future market trends. We use technical analysis as tool to complement our quantitative investment process.

The MAC is a fee-only investment advisory firm providing portfolio management to individuals and group pension plans. Our headquarters in is Dallas, TX. If you have questions about our services or would like to speak with someone regarding your account, please contact our office to speak with an adviser.