Investment Philosophy

We believe that investment success should not depend on market growth. Traditional investment strategies depend on economics of constant growth and assume that, so long as one's investment portfolio is sufficiently diversified, positive returns should be expected. As even mainstream economists like Thomas Piketty have pointed out, there is no reason to assume the extraordinary rates of growth seen during the twentieth century are a stable phenomenon. Accelerating rates of change in technology and politics - examples of which the readers have probably noticed - indicate we are in a time of transition.

It is likely that a major component of this transition will be a change from growth-dependent economics to zero-growth or cyclical economics. The goal of Virtuous Cycle Investment is to identify and invest in tools and strategies that will remain valuable after this transition runs its course.

Virtuous Cycle Investing uses an innovative capital management strategy inspired by Laloux's "Reinventing Organizations", Taleb's "Antifragile", and Berkshire Hathaway's internal capital allocation philosophy. We currently use a mix of very safe assets (such as arable land) and uncertain bets with a high upside (such as our partners' entrepreneurial ventures). Our goal is to provide the advantages of both a formal and an informal organisation, to the mutual benefit of all partners.

Individual projects are managed by small, agile working groups akin to members of an accelerator. A particular working group's membership may change, but it is best if there is sufficient familiarity among the members of each working group that they trust one another to handle tasks like budgeting and hiring without arbitration from a central authority.

We distinguish between 'committed' and 'unleveraged' assets. Committed assets are under control of the working group using them and can only be given unleveraged status by said working group. How many unleveraged assets can be committed by a given partner is determined by how much that partner has added to the unleveraged pool through successful projects or outside investment. An example of the system is shown below: