It’s About Time

We’ve never shared this story. It’s not all that fascinating, but it’s a vital story that explores the history of a big idea that has led to even bigger wealth.

It was a cold late-winter day several years ago when Julia Guth, Alex Green, Marc Lichtenfeld, Nathan Hurd (the director of our VIP Trading Services) and I locked ourselves into a windowless conference room a few blocks away from our Clubhouse in Baltimore.

Our goal was simple… to put the Club’s rich investment philosophy on paper.

In the more than 20 years of the Club’s history, it had never been done.

It was a fascinating exercise.

We discussed all aspects of our philosophy… starting with the cornerstone, our Four Pillars of Wealth.

But then we went deeper. Two hours or so into the effort – with a whiteboard filled with notes – we came to the topic of time. It was then that the room became electric.

That’s because, as we dug deeper and deeper, it became clear that time is at the heart of everything we do. For nearly three decades now, the Club has put the traditional sense of “time” on its head – from our core belief that timing the market is a fool’s errand to our contrarian view that something as traditionally “long term” as investing in bonds can be quite profitable in the short term.

And if you’ve read the report on our Oxford Wealth Pyramid – the rich document that came out of that meeting – you know time is at the heart of our winning strategy.

It’s the often misunderstood element that gives us an entirely unique way to balance risk and reward.

Perhaps nothing illustrates the power of time quite like our most successful trading service, Prime System Trader. Matthew Carr has set one Club record after another with the service… all by harnessing the idea of time.

His strategy looks at trends across certain timelines. Often, they’re quite predictable and repeat year after year or even quarter after quarter (really, the patterns can happen over an infinite array of timelines).

The key is spotting the pattern… and knowing how to take advantage of it.

Matthew loves to pick apart seasonal trends in the retail sector. He’ll play the Christmas rush, travel spending and even “beer-drinking season.” Each trend has led Members that follow his service to huge gains. In fact, his record-breaking play came from seasonal consumer spending. It led to a 2,733% gain on Columbia Sportswear (Nasdaq: COLM).

But that’s just one service. It focuses solely on time… and it pays off with record-breaking gains.

Clearly not all of our services can focus so tightly on the idea. And yet, when we put them all together, the element of time is clear.

To help you understand why the Club thinks time is a vital factor every investor must master, we must zoom out a bit.

Let me show you a chart.

It’s a unique chart that depicts a variety of investment strategies (not just asset classes), and the risk and time horizon most often associated with them.

What often shocks investors is that two asset classes – bonds and private equity – have such different risk structures and yet have very similar time horizons. A traditional bond portfolio matures over the span of decades, and many private equity deals take even longer to pay off. But bonds are quite safe, while private equity is filled with risk.

Most folks have never thought about it. But there is something quite powerful in that fact.

It became quite clear during our wintertime meeting several years ago. It’s where our philosophy really starts to buck tradition. The divergent risk structure across asset classes allows the Club to harness the power of time to balance that risk… and therefore significantly boost reward.

It’s an entirely nonconventional concept.

An investor can use different timelines or different risk profiles on the same timeline to create a safe, balanced portfolio – with significantly higher potential for profits.

Just because you’re making a few aggressive short-term trades in one sector or are using options to play another sector doesn’t mean you have to abandon the idea of having a balanced, conservative core portfolio.

It’s just the opposite.

Instead of focusing your efforts on a single strategy and investing time frame (i.e., the traditional model), this idea of timeline diversification allows you to create a portfolio of strategies that offer returns across a variety of time frames.

The key to all of this is to adequately balance risk, reward and time.

It’s an idea that often gets overlooked. But time is a powerful differentiator that the Club has used for decades to produce market-busting gains.

If you want to learn more about the Club’s philosophy and our view on time, you can read all about it in the report that came from that fateful winter meeting. Simply click here.

Good investing,

Andrew