Investment Management

Seeking investment management services can have many purposes, but a precursor to seeking such service is first understanding one’s reasons for why you want to invest in stocks; and how long a commitment you are willing to make. No matter which investment manager you choose, it often takes time before the outcomes of their approach become clear. In some cases, that period may be shorter if favorable market conditions create opportunities sooner, but the timing of such opportunities is uncertain and cannot be predicted in advance. Such is the nature of investing capital in the stock market, it is impossible to know beforehand  when and how a chance to do something really useful with your money may arise. It’s not every day that the stock market presents opportunities that may prove especially rewarding, which is why maintaining a long‑term perspective remains essential. 

No matter what “buzzwords” and salesmanship/promotion that we are presented with. There are long-standing investment principles that have guided decision-making in financial markets across many different environments and time periods. It is the job of an investment manager to not just to advertise that they know those principles, when providing their investment service. But to be able apply those principles; and demonstrate that they actually know what they mean within the world of investment management and financial analysis. 

It’s common for investment management firms to advise caution when clients express interest in pursuing higher returns. One reason often cited against performance-fee-only structures—such as the one used by Koko Asset Management, which does not charge traditional management fees—is the perception that such models may encourage investment in assets considered “riskier” or more “speculative.” While this concern is frequently raised, it’s important to recognize that terms like “risk” and “speculation” are often subjective and context-dependent, and may not reflect a universally agreed-upon standard. Now obviously, there is nothing wrong with an investment advisor providing cautionary advice to their client about such risks. In fact, it is the job of a good financial advisor — as someone who has a duty to warn their clients­ — to urge caution where there are material risks associated with their client’s investments and to safeguard their assets.

In order to probe further, however, one would actually need to know what is meant by the use of the word “riskier” or “speculative”. In the context of their use, such words only have the appearance of being objective, but are in fact quite subjective; with really no generally understood definition of what “riskier” or “speculative” exactly mean. Now this does not give way to gambling with money; or investing in businesses that are judged patently unsafe through careful investment analysis. Nor is it a call to throw caution to the wind by failing to apply common-sense investment principles. Nor is it being uninformed or oblivious to the important downside risks associated with the contemplated investment. Neither is the goal to encourage dangerous behavior like the use of margin, such leveraging can magnify losses.

What the above does convey however, is that the measures that led one to believe a stock is “risky” or “speculative” are inherently imprecise, and open to a broad spectrum of interpretation. Ultimately, any decision made using the client’s capital will be driven by the particular facts of the specific investment under consideration and not by such incomplete measures, which are at its root as commonly used, self-serving generalizations. 

Surely, we all understand that investments in "speculative" stocks or industries entail a increased measure of "risk", and that all such unnecessary risks in the markets should be avoided completely. But the use of the words “speculative” and “risky” in such a manner as they very often are is adding nothing more to our understanding of what mistakes to avoid, and which direction not to go when making investments. If one succeeds in answering the question "How will I not lose money in the the future?" the rising tide of the stock market will be more than enough to lift all the boats.

Another important consideration when evaluating investment services is the fee structure and how it may affect long-term performance. Across the money management industry, many investors have observed that sustained outperformance of broad market indexes is uncommon. At Koko Asset Management, the goal is not to claim superiority in every market environment, but rather to act decisively when opportunities appear favorable and when an investment makes sense on its own merits. In those circumstances, the approach may provide value beyond what a passive index alone can offer.

If a fund has no meaningful history of outperforming a passive index, it’s reasonable to question what additional value it may provide. That’s why many investors consider low‑cost index funds—such as the S&P 500—as a straightforward long‑term option. At Koko Asset Management, the difference lies in seeking out those rare opportunities where active decisions have the potential to turn careful analysis into something distinctly rewarding— and may add a dimension that passive investing alone does not typically provide .

Happily, many experienced investment managers have observed that applying long‑standing principles with discipline can support better decision‑making, rather than relying on rigid formulas or short‑term trends that overlook the context of each decision. An investor’s ability to carefully analyze businesses and relevant facts may play a more meaningful role in shaping results than focusing solely on broad measures of perceived risk.

Ultimately no matter who the investment manager, risk will not be fully eliminated. In fact, the very same investment funds that purport to make less “risky” or less “speculative” investments; may well lose a significant portion of your money during a stressed market environment; with some of those funds unable to recoup those losses in the future. 

Even though risk can never be fully eliminated and not every market crisis or adverse development can be anticipated with complete precision, many risks that affect investments may be thoughtfully managed or reduced by a cautious investment manager who stays within their circle of understanding. So long as the investment manager stays within the universe of businesses or stocks they understand. Investment risks can often be thoughtfully managed and potentially reduced through disciplined strategies—without necessarily limiting the opportunity for meaningful returns over time.