Offense Defense

Positioned defensively (70/30) most times, but goes on the offensive (100/0), eagerly, at times.

Offense/Defense refers to our ratio of equities vs cash (and others) at any point in time. Typically, when our offense declines in value, our defense doesn’t.

The idea behind this approach is less about asset-allocation & diversification, and more about having a framework to ensure we “always have dry powder” or “keep some off the table”, so as to have the ability to take action when opportunities present themselves.

For Flow, this defense has enabled us to scoop up large quantities of shares at low prices, over and over again. Low prices from time to time are a key ingredient behind higher returns over time.

"What we do know, however, is that occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community.  The timing of these epidemics will be unpredictable.  And the market aberrations produced by them will be equally unpredictable, both as to duration and degree.

Therefore, we never try to anticipate the arrival or departure of either disease.  Our goal is more modest: We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

“Berkshire Hathaway 1968 Shareholder Letter”, Warren Buffett