December 01, 2021
Our goal at Roosevelt Capital Management (RCM) is simple - yield with optionality. Said a little more expansively, our objective is for our clients to achieve a meaningful return coupled with the piece-of-mind provided by thoughtful risk management, a well-defined time horizon and the control offered by a separately managed account. Currently, this means investing exclusively in high yield short duration corporate bonds. We measure our success by comparing ourselves to the Markit iBoxx US Liquid 0 – 5 Year Index. We seek to beat this index, net of fees, by at least 150 basis points per year. While there are still a couple weeks left in the year, it appears we will achieve this objective handily in 2021.
In our pursuit of this objective, we are often asked about the principles and philosophy that guides us. Since the holidays are typically a time for reflection, we thought it was as good a time as any to address a more general set of questions. If one understands these things about us, they will better understand the “why” and the “how” of what we do.
Foundational Principles
| Experience is (almost always ) the most important thing |
While revolutionary ideas and spectacular innovations can and do come from the inexperienced and the novice, most of what surrounds us was designed and built by people that have spent decades learning their craft. This principle leads us to find experts wherever we can so that we can focus our efforts only where we believe we are the expert, which is a fairly narrow range of activities. |
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| Brainpower is expensive while processors are cheap |
A huge amount of "work" is repetitive, non-value added, but essential. This principle leads us to use the power of computation to make all non-value-added decisions wherever possible so we can focus our intellectual capabilities on the areas where "thought" can add the most value. |
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| Most information is worthless |
There may have been a time when having as much information as possible was critical to one's success. This is no longer the case. The real challenge for a person in the modern world is to learn what information should be ignored. This principle leads us to be skeptical about the usefulness of information. In fact, most of our data analysis energy is centered on limiting rather than expanding what we analyze. |
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| Teams create alchemy |
Diversity of thought, accountability, increased productivity, enhanced innovation, maximization of individuals' potential while minimizing weakness are just a few of the many potential benefits of teams. This principle leads us to work with individuals and organizations that buy into this principle and structure their workflow to maximize the benefit of teams. |
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| Humans have biases while probability and processes are objective |
Humans are emotional, have blind spots, are susceptible to biases and prone to cognitive dissonance. This principle leads us towards using our brianpower and experience to create well defined processes, grounded in probability and expected value, that are executed without human judgement. |
Investment Philosophy
With these foundational principles in place, what are the key beliefs that guide us?
First, markets exist to serve the process of investing not to guide the investor. If we are going to be successful over time, we must understand the value of the investments we make independent of the current state of the market.
Second, all investing decisions come down to two questions – time horizon and goals. By reducing investment decisions to these questions, we dramatically simplify our thinking about how to allocate capital.
Third, a sound investment strategy must, by definition, be highly repeatable. If it is not repeatable, then it is not an investment, it is a bet. There is nothing wrong with making bets if one understands that is what they are doing. But it is not investing.
Our investing philosophy in one sentence – investing is the act of allocating capital in a manner that is highly repeatable with a specific time horizon and return objective while always remaining aware that we do not control the market but can, if we are thoughtful, structured and disciplined in our approach, take advantage of it.
End of Year Message
As the end of 2021 approaches, Mike and I would like to thank you for your support. We are humbled by the confidence our clients place in us and will continue to work to retain that confidence and trust.
Please reach out to us with questions and comments. Thank you for trusting RCM with your capital. It is a privilege for us to serve you.
David and Mike
Disclaimer
Roosevelt Capital Management LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.
Past performance is not indicative of future performance. Principal value and investment return will fluctuate. No guarantees or assurances that the target returns will be achieved, or objectives will be met are implied. Future returns may differ significantly from past returns due to many different factors. Investments involve risk and the possibility of loss of principal.
The performance and characteristics information contained herein is for accounts solely managed by David Roosevelt, Managing Member of Roosevelt Capital Management LLC. Investment performance and characteristics through September 2019 are for Roosevelt Investments accounts managed by David Roosevelt. Investment performance and characteristics for October 2019 and thereafter are for Roosevelt Capital Management accounts managed by David Roosevelt. The performance information has been certified by ACA Compliance through December 31, 2018 and is available upon request. The values and performance information contained herein do not reflect management fees. While all the values used in this report were obtained from sources believed to be reliable, all calculations that underly numbers shown in this report believed to be accurate, and all assumptions made in this report believed to be reasonable, Roosevelt Capital Management LLC neither represents nor warrants the reports, values, calculations or assumptions and encourages each prospective investor to conduct their own review of the reports, values, calculations and assumptions.