The How and the Why

One of our biggest challenges is explaining the How and the Why of the Fund King System. A big part of the problem derives from our inability to separate the “How” from the “Why”. The reason it is so hard to separate is because in our minds, the “how” follows from the “why” and the “why” determines the “how”.

For those of you who what to see the “How”, follow us over to this page.

This page explores the “Why?”

Warning: You are probably not going to like the big idea.

Our purpose is to devise a system that makes money from a variety of financial markets under a wide variety of market conditions. We started with all the usual biases that come from working for a decade or two deep in the bowels of the institutional financial markets. The conclusions we came to, however, were not comfortable restatements of the status quo.

So, a word of caution: the ideas contained in this website may not agree with what you have been told or taught or what you may hold dear about financial markets. You may have a “gut feel” that this is all somehow “not right.” This will lead you to reject our approach outright and without further investigation.

If you feel uncomfortable about turning your back on traditional accepted investment practice, fear not, you are in the majority and we accept that under certain market conditions, your orthodox faith will be rewarded. Just as Newtonian physics (think apple falling on head) works perfectly well for most of what we observe in life, the Efficient Market Hypothesis, Modern Portfolio Theory and a Buy and Hold strategy will work under the right benign conditions. After all, if we release a hammer, it will land on our foot (and hurt). If we sign up for the monthly investment plan and use dollar cost averaging to buy equity mutual funds for several decades, we can retire comfortably.

But, as soon as we start to move away from that comfort zone of Newtonian physics or Great Moderation Bull Market, we notice that the familiar and commonsensical theories no longer work as well. There is a reason that your portfolio has not performed well over the last decade…but the reason is not to be found in the usual places.

If you are wondering whether you are ready to venture a step or two outside the comfort zone, try this example of non-Newtonian physics: pull your smartphone out, tap the touchscreen and call a friend. If you will concede that the conversation with your friend is real even though good old “action-reaction” Newtonian Physics couldn’t explain much beyond pulling the device out of your pocket, then you are ready to explore our Big Idea.

Let’s start at the beginning by breaking down the “Big Idea” behind the Fund King System into three crucial observations:

  • The Financial Markets have changed
  • The Financial Industry and Your Interests are not aligned
  • Your Emotions and Your Long Term Financial Health are not aligned

The Financial Markets have changed

In this section we will explore how the markets have changed and how you can adjust your investment strategy to take advantage of the broader than ever asset range as we muddle through choppy financial waters. Go here to read more.

The Financial Industry Conflict of Interest

In this section we will explore “Agency Conflict”. How to recognize it, how to avoid it and how to take advantage of the situation. Go here to read more.

The Limbic System and its impact on investing

While we may think our investment decisions are the result of cool, collected reason, emotions can play a large and disruptive role in the investment process. Learn to read the signs and learn how to design an investment program that filters out the emotional factor. Go here to read more.