Junto was launched in January 2020 with a simple idea of finding terrific public businesses to invest in over the long-term and assemble a community of like-minded investors who don’t find that idea all too bad.
We approach investing as an art as much as a science and we believe that it’s probably much less a science than people (and the money management industry) think. How else can perfectly intelligent and hard-working people, like the majority of the financial industry, at times look like absolute simpletons when the tide runs out, as it occasionally does? Or why is it that a simple low-cost index fund beats the average active manager year after year?
We think that this phenomenon is a result of a few factors.
Firstly, the incentive structure of the finance profession and the pressures coming from clients, employers, and employees create a short-term mindset to be active for the sake of activity. This often means that professional managers over-diversify for the sake of job security and trade excessively for the sake of action, however sacrificing long-term performance and value creation for clients.
Secondly, it’s a result of what behavioral psychologists call framing and reinforcement biases due to constant exposure to the industry itself. To approach investing intelligently, the investor would simply need to detach and look further than the frame of finance to achieve rationality by utilizing and reading from multiple intellectual disciplines.
This is no new observation. The importance of multidisciplinarity in investing has been preached many times, most notably starting in 1995 when Charlie Munger gave his famous speech, “The Psychology of Human Misjudgment”, at Harvard. In that speech, Munger summed up the approach of understanding the world through mental models from major disciplines such as physics, economics, and psychology. Despite the preaching, it seems that only a small sub-part of investors has really taken up the practice to study widely and deeply in order to invest rationally.
This brings us to the third factor: time. The fast-paced and pressuring culture of the finance profession simply does not allow the amount of time necessary to fulfill the two prior factors.
At Junto, we like fishing in the less crowded pond. That is why we take the time to connect the dots we collect by studying extensively a wide amount of books, periodicals, annual reports, SEC filings and much more to uncover the greatest investment opportunities and wonderful businesses that we understand, all the while incorporating Munger’s element of multidisciplinarity.
Junto is a place where members and readers alike can escape the conventional short-sightedness apparent in the stock market and think more deeply about not just businesses, but also other worldly lessons, all in the pursuit of becoming more intelligent investors. We gladly hope that you will follow us on this journey.
We act when opportunity comes knocking, and due to shifting market efficiency, the opportunities often do not knock. For Junto members and readers alike, this is a vital element to understand. We make an investment when we find something which we understand and is more attractive than our next-best opportunity, or which decreases the overall risk in the portfolio without sacrificing potential gain. Otherwise, we add to our current investments. This means that our internal opportunity cost is our core measurement for finding new investments and that we can sit on our behind for long periods of time (with plenty of time to study stocks as businesses). This also means, contrary to conventional methods, that we do not set goals for amount of trades we do within a certain time period, nor do we follow any rebalancing, diversification, or turnover targets for the investments we make.
Because our investment portfolio differs largely from the mean, there will be periods where we significantly underperform the market and periods where we perform tremendously better. There will also be times of mistakes to learn from. We take short-term pains with equanimity in our pursuit of performing very satisfactorily in the long-term.
In the Junto membership, you can follow our investment journey with complete transparency, invest right alongside us, see the entirety of our process, the things we look at, and the things we read. In our membership, we look to partner with like-minded investors who are interested in a patient, long-term investment approach that is rooted in the principles of value investing. If that sounds like you, you will inevitably find tremendous value with us.
To read more and join about the membership, click here.
Our name originates from a hero of ours, Ben Franklin, who founded “The Junto” in 1727 as a club for mutual improvements for its original 12 members. The club’s purpose was to discuss business affairs, politics, and philosophy to improve its members and their community. The Junto’s affairs and commitments have had a tremendous impact on American history. Learn more
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