Vol III, No. 8

September 2015

A monthly commentary about the role of behavior (and misbehavior) in investing

The Misbehaving Investor

This month's issue discusses the idea that growth and value are not mutually exclusive concepts and are both needed ingredients in an investment idea.

It also includes our first reference to Heinz ketchup in The Misbehaving Investor.

We welcome new investors in the Triad Small Cap Value mutual fund (TSCVX). Please click here for more information about the fund including a copy of the prospectus.

John Heldman, CFA

Partner | Portfolio Manager

Dave Hutchison, CFA

Partner | Portfolio Manager

About Us

Triad Investment Management manages all-cap, small-cap and balanced portfolios with a focus on Research, Behavior and Ethics. Triad is also the Adviser to the Triad Small Cap Value (TSCVX) mutual fund. Founded in 2008, Triad is a 100% employee-owned SEC registered investment adviser. Learn more at www.triadim.com.

Triad managed $131 million as of June 30, 2015. The Concentrated All-Cap Equity composite return, annualized and net of fees since inception, is 9.1% vs. 8.1% for the S&P 500 Index (April 30, 2008 to June 30, 2015).

Please review our Concentrated All-Cap Equity annual disclosure presentation and the important disclosures at the bottom of this issue. Past performance does not guarantee future results.

Label Fable

We humans like to keep it simple. Shortcuts help simplify everyday life. When shopping, we look for certain labels that help us quickly assess quality. We call these brands. They're all around us, and they shortcut the decision-making process. Often we take these labels for granted, and don't really think about the underlying product or service. That's why brands are so powerful and valuable. Whether it's Tiffany, Coca-Cola, BMW, Disney or Wells Fargo, labels help us shortcut our daily decision making.

The investing world also has labels. Stock investors often talk about large-cap, mid-cap and small-cap stocks. Domestic versus International. Passive and Active strategies. Growth and Value. We prefer not to think about labels but are aware that other investors do. Why? In our view, these labels sometimes describe some but not all of what we would consider a good investment.

Growth and Value investing is a case in point. Growth investors are traditionally thought of as aggressive investors concentrating on high growth areas such as Technology, Healthcare (especially Biotech) and anywhere else you can find jackrabbit-type companies growing like a weed, to mix metaphors.

Value investors are usually labeled as stodgy, boring investors focused on slow-growth, mature industries such as Energy, Capital Goods and Financials.

Both are labels. Stereotypes. In our view, you usually need both Growth and Value in an investment idea, not one or the other. If I buy a cheap "Value" stock and it doesn't grow, guess what? My "Value" stock could very likely stay cheap, as investors will probably continue to ignore the company. The lack of growth means the business probably isn't getting any more valuable.

Likewise, if I buy a fast-growing "Growth" stock but pay a ridiculous amount for it, while the company may continue to grow, my share price could potentially not grow - or plunge - since I probably paid too much.

Need proof? Look no further than the Great Tech Bubble of 1999-2000. Intel traded as high as $75 in 2000. Today it's $29. No, it didn't split its shares. Microsoft was $60. Today it's $44. Cisco Systems reached $82 and was the most highly valued company on the planet at that time (a cool $550 billion give or take). Today? 24 bucks or $120 billion. Talk about shrinkage. Had you purchased any of these at their 2000 peak-and there were plenty of other landmines that you could have stepped on besides these 3-you would be sitting on losses of 60%, 26% and 70% excluding modest dividends. That's 15 years of nothing. Actually less than nothing. Not very rewarding.

Unlike a Heinz ketchup label, investing labels don't always tell the whole story. Don't accept just Growth. Or just Value. They're not mutually exclusive, and in the end it's our view that an investor really needs both.

-John Heldman, CFA

Past performance does not guarantee future results. Results are presented net of fees and include the reinvestment of all income. The opinions expressed herein are those of Triad Investment Management, LLC and are subject to change without notice. Consider the investment objectives, risks and expenses before investing. The information in this presentation should not be considered as a recommendation to buy or sell any particular security and should not be considered as investment advice of any kind. You should not assume that any securities discussed in this report are or will be profitable, or that recommendations we make in the future will be profitable or equal the performance of any securities discussed in this presentation. The report is based on data obtained from sources believed to be reliable but is not guaranteed as being accurate and does not purport to be a complete summary of the available data. Recommendations for the past twelve months are available upon request. In addition to clients, partners and employees or their family members may have a position in any securities mentioned herein. Triad Investment Management, LLC is a registered investment adviser. More information about us is included in our SEC Form ADV Part 2, which is available upon request.

Triad Investment Management, LLC claims compliance with the Global Investment Performance Standards (GIPS�). Triad has been independently verified by Ashland Partners & Company, LLP for the period from the strategy's inception, April 30, 2008, through June 30, 2015. Triad is an SEC-registered investment advisor. The composite includes all fully discretionary separately managed accounts that follow the firm's Concentrated All-Cap Equity investment strategy, including those accounts no longer with the firm. Triad's strategy is to invest in a concentrated portfolio (usually holding between 20 to 30 securities) of common stocks, unrestricted as to market capitalization, of both domestic and international companies. The U.S. Dollar is the currency used to express performance. Past performance is not a guarantee of future results, and there is a risk of loss in investing in equities. Results are presented net of fees and include the reinvestment of all income. Investments made by Triad for its clients differ significantly in comparison to the referenced indexes in terms of security holdings, industry weightings, and asset allocations. Accordingly, investment results and volatility will differ from those of the benchmarks. As of June 30, 2013, the Triad Equity Composite was renamed the Concentrated All-Cap Equity Composite. For more information or for a copy of the firm's fully compliant presentation and the firm's list of composite descriptions, please contact us at (949) 679-3991.

%	2Q 15	YTD	1 Year	3 Year	5 Year	Inception
Triad Concentrated All-Cap Equity	(1.3)	(6.2)	(12.1)	11.9	13.7	9.1
S&P 500 Index	0.3	1.2	7.4	17.3	17.3	8.1

As of June 30, 2015. Results presented net of management fees.

� 2015 Triad Investment Management, LLC