I believe being DIFFERENT is all about making difficult trade-offs. It is more about deciding what NOT TO DO than about what TO DO and that is reflected in Richtwert's principles.

Although I am solely responsible for decisions at Richtwert, Richtwert's principles are stated in the "we", "us", "our" form because partners should only join Richtwert if they share these principles.

BUSINESS PRINCIPLES

No Customers – Partners

I believe successful business is about forming strong partnerships. Although Richtwert Capital is a corporation, my attitude is partnership.

I view my customers as the owner partners and myself as the managing partner.

No Conflicts of Interest – I Eat My Own Cooking

True partners sit in the same boat with aligned interests. At Richtwert, I like and eat my own cooking.

Therefore, I have nearly all my net worth invested alongside that of my investors as an owner partner (customer) in Richtwert.

No Fees – Percentage Share of Profits

I believe the best way to earn something is to actually deserve it. Therefore, I do not charge partners any fees. 

I only receive a share of profits, if partners' profits exceed a predefined annual target (hurdle rate). If we do not reach the hurdle, I earn nothing.

Annual losses are carried forward and added to the hurdle rate (high watermark), thereby increasing the hurdle rate for the following years.

No Sales People – Partners Encourage New Partners 

I do not view investment management as a job but rather as a profession. As such, I do not believe in actively selling my services.

If I do a great job for my partners, I am sure they will encourage other like-minded partners to join Richtwert.

This allows me to focus on investing and keeps costs low for partners.

No Hiding – Honesty

I will tell partners the facts I would want to know if our positions were reversed, accurately reporting my achievements, neither hiding mistakes nor taking credit for being lucky.

No Harming – We Invest with Integrity

I firmly believe that we do not need to be unethical to earn attractive returns on our capital. There will be attractive investment opportunities that I will not undertake because I believe they are below our ethical standards. Businesses that have significant exposure to activities involving weapons, tobacco or gambling fall into this category, as well as businesses that obviously and repeatedly act irresponsibly.

WHAT DOES IT MEAN

TO BE DIFFERENT?

"Today we have more of everything.

More brands. More products. More choices. 

But it all just feels like more of the same. 

A great big blur of similarity."

Moon, Youngme. Different: Escaping the Competitive Herd. Crown, 2010

Youngme Moon is Professor and Senior Associate Dean of Strategy & Innovation at Harvard Business School

 

So what does it mean to be DIFFERENT as an investor?

 
INVESTMENT PRINCIPLES

No Speculating, No Economic Forecasting, No Market Timing, No Trading –

We Invest like Business Owners with a Focus on Individual Businesses & Insist on Margin of Safety

Count the number of economists and traders who became millionaires following their own advice and you know why.

 

No Dancing to the Market’s Tunes – The Market Is There to Serve Us, Not to Instruct Us

"The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement." 

Graham, Benjamin. The Intelligent Investor. Collins, 2006

 

No Short Term Thinking – We Invest with a Mid & Long Term Horizon

No one knows what will happen in the short term. But that does not stop most people from trying to predict the short term anyway. 

Instead, I believe rational and thoughtful investors can estimate how select businesses will develop mid & long term and that is what we focus on.

 

No Index/Benchmark Hugging – We Think & Act Independently

One cannot think and act like the average and expect to achieve above average results.

 

No Excessive Diversification – We Focus on the Best Ideas

Too much diversification is a terrible mistake for those who know what they are doing.  Very few people get rich on their tenth best idea!

 

No Investment Styles – We just Invest Rationally

Styles may be good for marketing but only being rational can help in reducing risk and achieving above average results.

 

No Investment Committee – Richtwert Is a One Captain Ship

Group dynamics discourage independent thinking, I know this from experience. Without independence one cannot expect above average results.

 

Gain access to our Partner's Manual and learn more about Richtwert's principles.

© 2015-2019 Richtwert Capital GmbH. All rights reserved. 

Icons designed by Freepic, Madebyoliver from Flaticon