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Building a Small/MicroCap Strategy from Scratch with Brian Bares, Founder, Portfolio Manager, and Research Analyst at Bares Capital Management
Planet MicroCap Podcast | MicroCap Investing Strategies
Evolution towards a concentrated and institutional allocation approach
The 'Yale model', now known as the endowment model, revolutionized the traditional 60-40 stocks-bonds portfolios by diversifying into multiple asset classes. This shift involved reducing the public equity book from 60% to less than 60% and introducing more concentrated managers. The speaker found holding 100 stocks with 10 investment managers provided passive results with high fees, prompting a move towards more concentrated portfolios. They believed a purely quantitative approach to investing was insufficient and emphasized the importance of a Bayesian analysis to properly structure portfolios.
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