Vol III, No. 10

November 2015

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

The Misbehaving Investor

Happy Thanksgiving from all of us at Triad!

We invite you to learn more about the Triad Small Cap Value Fund (TSCVX). Click here to learn more.

John Feb 5

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 Fund (symbol TSCVX). Founded in 2008, Triad is a 100% employee-owned SEC registered investment adviser. Learn more at www.triadim.com.

Triad managed $114 million as of September 30, 2015. The Concentrated All-Cap Equity composite return, annualized and net of fees since inception, is 6.4% vs. 6.8% for the S&P 500 Index (April 30, 2008 to September 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.

Goal Tending

As I drove to the office, listening to a B.B. King CD (I know, old-school) for the third time in 2 days, I suddenly decided to switch to the radio. Given the dismal state of radio music, I turned to National Public Radio, seeking intellectual substance.

I happened to catch the tail end of Marketplace, a business-focused news segment on NPR. Host David Brancaccio was interviewing Colin Camerer, a California Institute of Technology professor of behavioral finance - who knew the rocket scientists at Cal Tech would be interested in wildly unpredictable humans? Professor Camerer spends his days analyzing the choices that people make in the realm of economics and finance. He was discussing a study he did of independent taxicab drivers and the seemingly illogical choices that guide their scheduling decisions.

What he found was these sole proprietors often target a certain amount of daily income and then call it a day. For instance, $200 per day might do the trick, and they're done. On very good days the cabbies would hit their target compensation early and quit driving. On slow days they would work longer hours to hit the target daily income. They worked less on good days and more on bad days. Sound logical?

The professor's research showed that had they worked a full day on the busier days, they could have worked a partial day on the slow days. The result: 20% more income with the same number of hours worked. They were leaving money on the table by not "making hay while the sun shines".

It can work that way in investing, too. Here at Triad we have a strict process for our research of new ideas and the way we build our portfolios. But we know that good ideas are rare; when they come they can come in bunches, sometimes several in the same industry and/or sector. We've allowed ourselves the flexibility to try and take advantage of these situations by not setting hard limits.

What's needed is intelligent, thoughtful consideration of the risks and rewards, while keeping in mind previously established long-term goals. For example, had the cab drivers targeted a weekly income goal instead of daily, they might have put more money in their pockets while working the same number of hours. We try and think along these lines to make sure we are balancing discipline with flexibility to react when opportunity knocks (or in taxi-speak, flags you down).

-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 September 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.

%	3Q 15	YTD	1 Year	3 Year	5 Year	Inception
Triad Concentrated All-Cap Equity	(15.4)	(20.7)	(18.5)	2.6	6.9	6.4
S&P 500 Index	(6.4)	(5.3)	(0.6)	12.4	13.3	6.8

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

� 2015 Triad Investment Management, LLC