By Tom Bradley

Because the Founders Fund is not fully invested at this time (less than full allocations to bonds and stocks), we’re increasingly being described by prospective clients as conservative. "Lori, I’ve read your materials and it appears to me that Steadyhand is quite a conservative firm."

I don’t believe that to be an accurate description of how we invest.
Prudent - yes.
Careful - for sure.
Valuation driven - absolutely.
Focused on fitting the asset mix to the client’s needs – constantly.
And thoughtful – well, we try.

But conservative is not a good tagline for Steadyhand. It implies that we have a bias to taking less risk, or even being risk averse. Certainly, we can build conservative portfolios for clients who need that, but we can also construct growth-oriented portfolios. Indeed, our more aggressive clients have done well.

What we are is currently cautious. I don’t think the investing environment is very enticing right now. I arrive at this conclusion by listening to our fund managers, who are at the front lines, and doing my own independent research, with a heavy dose of input from Salman.

What I’m hearing and seeing is that bargains are hard to come by. In our managers’ opinion, there are few investments that have significantly more upside than downside. So we choose to keep the proverbial bat on our shoulder and wait for what Warren Buffett calls the fat pitch.

I should note, the path to currently cautious has been a gradual one. In hindsight, it started too early, but was and is an attempt to position the Founders Fund ‘approximately right’ for what’s ahead.

But investors shouldn’t expect us to always be cautious (in the period from late 2008 to 2012, we pursued growth with vigour). They should choose Steadyhand for all kinds of great reasons, but risk averse shouldn’t be one of them. Currently cautious – yes. Conservative – not so much.