Allocation Manifesto

Building a first principles Nature of Value Allocation (NoVA) portfolio requires understanding:


Value Concepts

  1. Price isn’t value. Price is opinions about value.
  2. Economic information works like genetic information.
  3. Money represents expectations of value delivery.
  4. Applied information: Knowledge creates company capabilities.
  5. Companies compete in clusters to capture customers.
  6. Successful companies amplify and grow their value creation.
  7. Companies and competitive clusters link forming adaptive economic networks.
  8. All adaptive networks evolve for energy flow efficiency phi(m).

Managing risk

  1. Allocate based on sources of value not historical price relationships.
  2. Resilience comes from diversity and redundancy.
  3. Buy and sell based on the price to value relationship.

Maximizing value creation & capture

  1. Identify the source of value creation.
  2. Identify the long-term stability of value creation.
  3. Identify the expected life of value creation.