The Opportunity Map represents a synergistic approach to wealth management and capital development. Each component of the map is important on its own, and each component is dependent on the others for long term success.
1. Inefficiency and Opportunity
Applying The Opportunity Map means first spotting and assessing inefficiencies and opportunities in markets. Inefficiencies create pricing distortions that allow for sustainable profits through the systematic application of investment discipline. Opportunities are typically unique business situations that present themselves from time to time.
Both inefficiencies and opportunities require a deployment of capital to generate profit. We believe that spotting and properly quantifying the economic proposition is key to beginning any investment. The ability to capitalize on the inefficiency or opportunity hinges next on strategy.
Experience has taught that successful investing requires both good discipline and the ability to execute that discipline faithfully. The search for the "golden ticket" or perfect model for investing is a fruitless one. Investors often ignore this second important component of strategy, the ability to execute the investment model faithfully, when that element may be the ultimate determinant of success or failure
Both components are inseparable and crucial to investment success.
3. Process and Risk Management
Once the strategy has been developed, decisions need to be made regarding the framework within which to execute the discipline. Legal structures, accounting protocols, performance measurement benchmarks, business process, team building and much more needs to be determined and assembled.
The path to wealth creation and wealth management is first paved with the avoidance of loss. It's very difficult to make money if one has to overcome out-sized losses. We recognize that it's impossible to invest without incurring risk and therefore losses. However, minimizing those losses is crucial to solid risk management and success in investing.
Risk management development has a direct connection to strategy development. Without risk management, the strategy is incomplete.
4. Execution and Evaluation
Having a robust investment discipline is important. But the ability to actually implement that discipline is equally so. We bring a strong focus to bear on execution of the strategy as crafted. The business model drives the structure and the faithful implementation of the plan can determine ultimate success.
Ongoing evaluation and performance measurement is key to monitoring the success or failure of your investment program. Without timely feedback and reporting, strategic decision points can be missed, flaws in the strategy go unrecognized and the ultimate ability of the program to be successful is compromised.