“Show me the incentive, I’ll show you the outcome.” – Charlie Munger
At Second Level Capital, we individually manage portfolios. We are keenly aware that having a personal touch on each portfolio limits our ability to grow. We don’t care. This puts more emphasis on the client selection process, but we take pride in taking care of those who have entrusted us with their investing life. The incremental revenue increase from having double the clients doesn’t feel that appealing to us. That doesn’t mean we don’t want to grow, but we do want to grow intelligently and make sure every client is getting the attention to detail we expect for ourselves.
Our investment style is a mostly passive approach, with modest active participation geared toward a specific portfolio purpose (mostly income generation). The bulk of our clients’ portfolios (and our own) are invested in a fee-based, core, low-cost, global asset allocation model; however we sometimes also include an active portfolio for behavioral purposes, where appropriate.
Our investment process is based around portfolio construction, risk management, and behavioral psychology. It’s been shown that sticking to a bad plan typically works out better than deviating from a good one. Behavioral counseling, an interactive and evolving investment plan, and constant communication are the main tools we use to help clients reach their financial goals.
