The investment community has traditionally used one of two approaches to measure the value of assets: the firm-foundation theory or the castle-in-the-air theory.1 The firm-foundation theory is concerned with the intrinsic value of an investment instrument, be it a common stock or commodity. An analysis of the security’s value against its price in the market is supposed to direct the buying and selling of the security. The castle-in-the-air theory of investing is also referred to as the “greater fool” theory because its primary objective is to determine how to get a higher price than what the security was originally purchased for. As Burton G. Malkiel so accurately wrote: “The successful investor tries to beat the gun by estimating what investment situations are most susceptible to public castle-building and then buying before the crowd.”
Due to the fact that these two approaches comprise the majority of investment-related transactions in a market, when they are combined, they essentially become the market since every transaction must have a seller and a corresponding buyer. Replacing “firm” for its synonymous “hard,” and combining both theories to essentially mirror the market with a macro, indexing approach to investing, Hardcastle was born.
The purpose of Hardcastle Research is to provide readers with the most useful, data-driven investment research. Our articles are meant to be straightforward guides on how to navigate investing issues that are relevant to anyone who is looking to earn a return on their capital. We do not provide get-rich-quick schemes and we certainly do not attempt to make investing sound esoteric; a tactic often used by investment professionals to continue the dependency and thus maintain the business. There are no secrets to investing, and our research reflects this fact with the underlying philosophy of investing early and often, keeping investment costs to an absolute minimum, broadly diversifying across multiple asset classes, being cognizant of taxes, and rebalancing regularly to reach financial goals, whatever they may be.
Our research is drawn from academia, industry, and everything in between. We use hard data to let readers understand the numbers behind certain strategies. Our sources are provided for every article we publish, whether it's a simple statement or an extensive report.
At the heart of Hardcastle is a desire to educate the investing public on all things related to their financial success. There have been very few cases where an all-cash strategy of investing—whereby you stash your money in a mattress—has yielded great results over long periods of time. There is a necessity to invest, and it is paramount that it is done with the utmost prudence and care.
1. A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Burton G. Malkiel