The Importance of Price

At its simplest element, investing is about capturing the future cash flows of an investment at an attractive price. That’s the case whether those cash flows come from earnings, interest or rents. What you pay is everything. The goal is to buy at a price that is expected to result in an attractive return and sell when the market price makes the potential future return either no longer attractive, or less attractive, than another alternative.

This axiom is just as true for asset classes as it is for individual securities. In fact, applying it at the asset-class level has a much greater impact on your portfolio since no individual security should be held in the same concentrations as an entire asset class. Knowing this, we go to great lengths to understand this critical relationship between future cash flows and current price at the asset class level, where it matters most.