At Wilde Capital Management, the driving objective for our clients is preserving wealth while taking thoughtful and appropriate risks over time to enhance that wealth. Our investment philosophy and approach are based on two key tenets.

Patient Investing

Most often associated with the discipline required for successful entrepreneurs and private investment, patient investing involves committing assets with an objective in mind and the willingness and ability to give sufficient time to realize that objective. For example, if you were to invest money with your sister so that she could open her own law practice, you would not be demanding a return on your investment in the first 90 days. It is understood that it will take her time to establish a client base, provide legal services, bill for hours worked, cover her expenses, and pay her stakeholders. However, in our experience, many investors have not shown the same patience with their investment portfolios. People do not want to wait for the thesis, the explanation for why an investment is a good idea, to play out. Markets are complex and there are always forces at work beyond anyone’s control that can accelerate, delay, or divert the path to fulfilling an investment thesis.

It must be recognized that investing is a behavioral exercise; and there is a tendency for clients as well as investment professionals to make short-term emotion-driven decisions that in the long-run work to the detriment of good outcomes. Put simply, people have the tendency to hang on to a good thing too long, and let go too quickly when things seem to be going wrong. Having a clear expectation of what success looks like as well as what the floor should be for an idea that is not working are critical. By accepting that these behavioral biases exist, and that investments and markets do not deliver on a set timetable, an investor has an opportunity to step back and focus on the overall objective.

We approach our objective as investors, not as traders. For WCM, an investment opportunity has to be meaningful enough and persistent enough to be able to capture some or all of the expected return within the limitations of real client accounts and the markets in which they are invested. Patience allows us to be more selective in pursuing these opportunities as well. We can pass on the fleeting, directionless events and look for strong fundamental and technical signals that may unfold over longer periods of time. The measures of success are taken in years and market cycles, not months and quarters.

 

A Transparent, Disciplined and Repeatable Process

We do a lot, but we firmly believe that what we do should not be hard to explain. We are looking for elegant and straightforward solutions to complex problems that face investors.

Develop Long-Term Strategic vs. Short-Term Tactical Positioning

Our clients’ goals drive the long-term decisions we make for our portfolios. When the money is needed, how much volatility the client can tolerate over that time, and what the level of interest is in various global markets determines the long-term “strategic” asset allocation. The views we form on the near-term opportunities and challenges in the world drive our short-term decisionmaking, our “tactical” asset allocation.

Form a World View

Markets do not operate in a vacuum. They are affected by the events and forces that swirl around us on a daily basis. Whether it is politics, or the weather, a national holiday or the 24 hour news cycle,

investors react, and these reactions express themselves in the behavior of the markets. The first thing we do every day is be informed. We rely on a variety of sources from print publications to news wires to cable outlets to blogs. The goal is to gather a lot of information, decide what is most likely to drive markets vs. what is noise, collate what we deem is most material, and assemble a view based on it.

Form a Market View

Markets are mechanisms for evaluating and pricing the information provided by the real economy and the policies applied and commerce that takes place in it. We take the world view which we have formulated and look for patterns and behaviors in the market that we believe are responsive to our view. Our market view is not static and evolves with our world view.

Translate

Forming a world view and a market view are both intellectual exercises. The next challenge is transforming these views into actions that can be taken in a client’s portfolio. Some aspects of our views translate directly. Other aspects of our views might be seen through indirect translation. Finally, some views might be considered of global importance, but do not translate at all. No matter how views translate, the key is understanding what they mean for client portfolios.

Research

The research is not over after our world and market views are formed. The translation to real portfolios requires insight into what investments are most true to our views. Most of our implementation is done using registered investment funds, predominantly exchange traded funds (ETFs). We research investment vehicles to identify the attributes we seek: they provide the desired exposure, are run with appropriate fees, are managed by seasoned investment teams with proven track records, trade in an orderly fashion, and provide access to liquidity.

Implement

Once views are formed and translated into researched funds for investment, portfolio construction begins. The WCM team has an overall framework for how our clients’ assets are exposed to various markets and factors, from U.S. equities to foreign bonds, real assets and cash. The overall strategic asset allocation for a client is keyed to that client’s expressed and documented investment objectives. WCM will then make tactical asset allocation adjustments around that strategic allocation as we interpret and react to news and markets to manage risk and uncover potential opportunities. The strategic and tactical asset allocations together describe what a client’s total exposure looks like at a certain moment in time.

Rebalance

WCM employs what we call active rebalancing for client accounts. Rather than exclusively rebalance on a set schedule or when the portfolio drifts by more than a certain amount, we monitor accounts and make an active decision to rebalance when conditions are appropriate.

Manage Risk

There is no opportunity for return without taking risk. The key is taking calculated and appropriate risks with an expectation of what the benefit to the portfolio will be. Unaccounted risks are the landmines of investing. WCM attempts to formulate a comprehensive inventory of the risk taken through the strategic and tactical asset allocation and fund selection and makes sure it comports with the client’s objectives and WCM’s views.

Review and Report

WCM makes available a full suite of reports through our platform partner TD Ameritrade which our clients can access and review on account holdings, transactions, and performance. We also write extensively about our views, what we see unfolding in the markets, and how this affects client investments. We want our clients and their advisors to get an inside take on what and how we think.