Strategy

When I was a Cadet at the United States Military Academy there was a group of Cadets who I thought were really cool, partially because they were something of degenerates. They conducted actions in the shadows like smoke spice on rooftops and book sports bets. All of which compounded clout in the Cadet underworld, which held much more power than met the eye. A notion that drove me to join in a bet on a football game one time. Drawing particular attention to the fact that it only happened once because it was a miserable experience despite winning. It truly did make me sick to my stomach because it felt like an awful action and an uncouth, unsophisticated way to make a profit. Certainly not how I wanted to live my life and grow my wealth. So I never made a bet like that again and have since been seeking the surety that comes from a sophisticated strategy with more precise control over outcomes.

Up until recently- all of my private and public equity investing efforts have been considered Research and Development in the spirit of understanding the balance of risk, reward, control, time, and scale. All research and development done with my personal capital on largely my personal time. A fact that any sophisticated prospective investor should insist on from their manager. As any edge that's good enough to use in a professional investment setting should be so good that the investor would consider hoarding it personally, but a great manager will not be content to just run a worldclass strategy all by themselves- they want to compete. They want to have a voice that matters because they are objectively dominant at the largest scale. They cannot help but compete for the biggest voice once other competitors are trying to use their voice to slander them. Competitors who use every edge possible: including grey and dark edges. And how could they not when everyone is competing with such intensity that the game almost feels zero-sum, despite being free-market capitalism uncapped by hard backing or entrant limits.

No wonder almost all great investment managers have gotten accused or caught cheating in some way in their careers. The competition is that fierce. Exactly how all exceptional professional racecar drivers have gotten into a crash at some point. When everyone is a great competitive driver, you have to push everything to the limit to win. And when you push the car to the edge enough times- a crash is unavoidable. But a great driver can crash cleanly and get back in the car with a vastly improved understanding of how to ride the limit without crashing again. And that's the manager you want- the one who competes at an elite level but cleanly enough to avoid crashing. Because they have had a bad enough crash to do everything in their power to avoid crashing again.

That is the JC strategic spirit in a nutshell: run strategies that push the limits of performance without risk of loss.

Imagine you have a 3 foot thick by 6 foot tall wall of hedges around your home, and it has the daunting responsibility of keeping risk away while sustaining growth. So the hedges are carefully selected thorny, berry Bushes that can be harvested and need to be groomed. Groomed to perfection all around because risk is equally likely from all sides through an unmanicured gap in the hedges. Gaps that are created by over-harvesting or under-nurturing the hedges. Maintenance that can only be done at scale with quantitative methods. Measuring exactly how much to feed the different parts of the hedges that are growing at different rates. Leading to different harvest times that sustain those behind the protection of the hedges.

That imaginative metaphor is how you should picture Justified Capital. Your investment capital contributing to the hedges of berry bushes that the manager has precisely measured to protect from risk while yielding fruit over time.

Other investment vehicles may build hedges on the sides of the house that they have modeled-out to get the most sun and produce the most yield, but Justified Capital is rigorous about balancing risk, even if that means reduced overall returns. Regardless of weather, sun, and risk disposition- Justified Capital researches, generates, and deploys algorithmic strategies that precisely balance risk mitigation and return production.

The research generally draws on fields of data science, applied math/statistics, computer science, finance, numerical analysis, and software engineering. Adding that the research- in its purest and most valuable form- combines all the most valuable quantitative research methods from the principal's bag. Knowing that the uniqueness of the ideas at the intersection of those aforementioned technical fields is what creates the differentiation from other market participants necessary to sustain risk absorption and return production.