A prospective client asked me recently, in all sincerity, “What is it that makes you guys so different?” He had read the book, and he had a firm grasp of how we operate. Even so, he seemed to want to hear it from me, again. While the answer may seem obvious to us, I love taking clients and prospective advisors through a thought process that really is quite unique to Beck Bode. Naturally, I always start with our investment Strategies because that is the most tangible, easiest access point for people.
If I were to boil it down to a few bullets (ok, a few paragraphs), it would go something like this.
First and foremost, what sets us apart is the fact that we don’t use historical information at all in our investment decisions. You know that “fine print” at the bottom of all investment fact sheets? It’s that disclaimer that says, “Past performance is not indicative of future results.” Ironically, while all investment outfits are obligated to say this, the truth is that many investment managers do look at historical data to make sense of the market. At Beck Bode, we absolutely do not look at the past for anything. Take it a step further, we don’t try to make sense of the market. In our view, the past has no bearing on how you as an investor will do in the future. What you do as an investor today is determined by what happens in the future, which is unknown and unknowable.
The second point that sets us apart is that our sell discipline is our most valuable capability. Knowing when to sell is, we would argue, the most important determinant of an investor’s success. This core to our belief system. We believe that if we don't know when we're going to sell something, we don't buy it in the first place. Most of your return as an investor comes from knowing when to sell, not necessarily knowing what to buy, which may sound funny but is true. Knowing when to sell or how long to hold on to a position can have dramatic orders of magnitude on your long-term outcome.
Third is our belief in concentrating assets. Proper diversification, in our view, is significantly different from how the rest of the industry sees it. We believe that proper diversification is represented by a very specific concentration of assets. Contrary to conventional views, this does not mean including every asset class in your portfolio. We believe that optimal diversification is achieved by concentrating the diversifiable risk in your portfolio across 15 to 30 holdings. Note, I said holdings, not asset classes. This, too, is critical to our success.
These first three points are all about how the Strategies make us different. And yet so much of what we do, and what sets us apart is outside of the Strategies. It’s just that the Strategies are easier to explain, easier to define, easier for people to understand without having experienced them.
There are many strong values that we embrace as a firm and as a community. The three that come to mind instantly are family, fitness, and faith. Let’s start with the first two, family and fitness. We embrace the notion of “taking care” and doing good. Taking care means taking care of people, taking care of things, taking care of our bodies. It makes sense that “taking care” would be important to us, because our focus is not on today or tomorrow or next week. We are working toward a point long into the future. When your time horizon is this long, you really do have to take care of yourself, your health, your family, and your finances. You want to make sure you’re around to see all this patience come to some good outcome.
But how do you express that without sounding clichéd and corny? I do this by opening up to people and telling them my very personal story about what “taking care” means to me. For me and Jim, and just about everyone at our firm, family is hugely important. Many of us either come from big families or are building big families of our own. For those that don’t, this firm itself is something of a big family. So we talk about our own families a lot.
I also referred to faith as a value: faith, not following a specific doctrine, but as the ability and willingness to believe in something. The willingness to trust. Being OK with not knowing everything. Being OK with not knowing what the market will do, or what tomorrow will bring, but just knowing that there is a future ahead. At Beck Bode, we are a company of believers. If you aren’t a believer, chances are you won’t fit in here, either as a team member or as an investor.
Not only do we deeply believe in the Strategies, which are a fully transparent set of rules by which we invest our own and our clients’ money, but my business partner, Jim and I have succeeded in attracting talented people who are excited to join us in the journey to bring the Strategies to as many people as possible.
When I say, “faith,” I mean people who have faith in a destination they can’t see, people who are passionate about something, willing to stand for something, willing to come on board when they had not ever seen or heard of or worked for anything quite like our company. Our team members, especially those who signed on in the early days of our firm, took a chance on us. Our earliest clients took a chance on us. Once we decided to leave the traditional wire house career path, Jim and I never questioned what we were doing. We knew that the Strategies were the way, but these people who were following us had never heard of the Strategies, yet they trusted us, they followed their instincts, and they decided to come along for the ride.
It takes a certain boldness, a courage to walk away from what the mainstream is doing, and to take a chance on (what was, in the early days) essentially a small startup. Now that we are bigger and in a later stage of our growth, it’s possible to point back to years of success, data points that show that we are (always were) viable. But those folks who were willing to trust their gut to follow our lead were bold. They are our kind.
If you’ve known me for some time, you’ll know how often I bring up that my dad flew helicopters in Vietnam. Flying helicopters is one of the most dangerous things to do in any war, and in Vietnam in particular, the survival rate of helicopter pilots was incredibly low. But he survived, and along with the opportunity to be fathered by him, I developed a deep respect for his brand of courage. All to say that anyone who asks me what sets us apart as a company, right after I tell them about the Strategies, I would share with them a story about this amazing team (and clients) at Beck Bode who took a chance on us. I would give them the analogy about the helicopter pilot and the courage it takes to do what most others won’t.
We invest with and for people who have big families or big ideas and big dreams. We tend to attract people who are interested in using their money for a higher purpose because they are invested in something bigger than themselves. They sense an obligation to contribute, the same way we sense an obligation to contribute.
When clients see themselves in us, and/or when we see ourselves in our clients, we know that we have found our kind.
Contact us today to find out more about our investment Strategies.