Riding The Centaur: How I Explain “Core-And-Explore” Investing

I drive a hybrid, own a labradoodle, and live in the suburbs. As a result, my car achieves excellent mileage, my dog doesn’t shed, and my yard is easy to mow. Like many others, I’ve found great value in taking a “best of both worlds” approach. 

So, when people inquire about what business I’m in, I smile and reply: “Centaurs.” 

For those unfamiliar, the centaur is a mythical creature, often found in fantasy novels like The Chronicles of Narnia.¹ Born with the lower body of a horse and the upper body of a human, it merges the strength and endurance of the former with the intellect and dexterity of the latter. 

This unusual metaphor is also a great conversation starter for the investment philosophy at Bastion Fiduciary. Just as the mythical centaur combines horsepower with brainpower, our team blends the power and stability of index investing with the insight and nimbleness of principled active management. 

The Centaur Concept: Precision Plus Power 

We do more than just apply cookie-cutter portfolios to investing. We provide our clients with tailored, fiduciary financial planning. By working with us, you not only collaborate closely with advisors like Kirk Kinder and Jeff Alderfer, but you also gain direct access to our internal portfolio managers: 

• Loretta “Retz” Reeves leads our International Portfolio. 
• John Rotonti oversees the Infrastructure & Industrials Portfolio. 
• Cale Smith, our CEO, heads the Energy Portfolio. 

By communicating with us directly—via phone, email, and posts on the Bastion Boards (our exclusive online community)—our clients enjoy an uncommon level of transparency. 

Built to Endure: The Strengths of Index Investing 

Our investment philosophy follows the well-known core-and-explore (C&E) framework (AKA “core-and satellite).² 

The core—typically representing 60% to 99% of a portfolio—is constructed from low-cost index products. This forms the “horse body” by being robust, reliable, and cost-effective. Following John Bogle’s principles, we emphasize reducing expenses and leveraging broad diversification for long-term growth.³ 

That said, while index products seldom acquire outright losers, they often miss subtle distinctions. Their strength lies in systematic exposure, not nuanced evaluation.⁴ For instance, when a company exits the Russell 2000, it gets sold automatically, even if a recovery remains likely.⁵ Such mechanical decisions, applied without emotion, are excellent for building the wealth required for vital goals (such as a dignified retirement).⁶ However, the “passive” index approach also creates market inefficiencies—openings that skillful active managers can exploit by employing judgment and patience.⁷ 

Focused Insight: Where Disciplined Active Management Excels 

This is where our active portfolios add value. They’re designed to function within the “explore” segment of a portfolio, and are therefore intentionally concentrated.⁸ Each one contains between 12 and 50 select companies—significantly fewer than the hundreds in a typical index. This forced selectivity, in turn, demands careful due diligence.⁴ 

At Bastion, our approach to the “explore” segment is rooted in rigorous discipline and extensive research. I’d also be remiss not to acknowledge the harm some have carelessly caused while claiming to practice C&E.⁹ We, therefore, employ time-tested fundamental analysis (FA) methods to support our buy/sell decisions. One key FA tactic is to identify and assess economic “moats” (e.g., patented ideas, expensive equipment, demonstrated customer loyalty, etc.) that can delay and deter would-be competitors.¹⁰ 

Consider the Bastion Energy Strategy, managed by Cale Smith (who is also our CEO). His strategy focuses on energy companies and related areas like mining, renewables, battery storage, and industrial sectors. It usually holds 20–30 U.S.-listed firms with market capitalizations exceeding $500 million, all chosen via calculations and research driven by checklists that help us mitigate human bias.¹¹ 

The same careful attitude also characterizes both Retz’s International and John’s Infrastructure & Industrials Strategies. Across all active portfolios, we aim to invest when companies trade well below a reasonable calculation of their intrinsic worth.¹² Then we patiently wait for the market to correct its prior (mis)judgment. As Warren Buffett once summarized the wisdom of his mentor, the economist Benjamin Graham: “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.”¹³ 

Comprehensive Approach: Investing with Purpose 

Economies are like roller coasters: fear and joy are both part of the experience. Therefore, even the strongest portfolios should be part of a guiding framework that takes the entire financial life of the client into account.¹⁴ That’s why Bastion combines investment management with holistic, individualized financial planning. 

As fee-only fiduciaries, we help clients: 

• Align retirement objectives with income and savings plans. 
• Optimize insurance to avoid unnecessary costs. 
• Develop tax-efficient investment and withdrawal strategies. 
• Plan for wealth transfer across generations. 
• Navigate life changes with confidence. 
• Stay focused when they (inevitably) experience market volatility. 

In finance, “alpha” describes returns above a benchmark. But we strive for more. Through strategic planning, we deliver personal alpha—the lasting benefit of well-crafted decisions tailored to each client’s unique situation. 

Why Choose Bastion Fiduciary? 

The do-it-yourself investor is, for better or worse, not a professional. But just like a hobbyist who loves riding horses, you can enjoy participating in markets without doing everything yourself. A financial advisor can walk beside you, offer advice, and even calm a spooked portfolio – not unlike a full-time equestrian trainer. 

But a centaur doesn’t merely guide the horse. It is the horse. 

At Bastion, you don’t simply receive counsel. You gain strength, harmony, accountability, and strategy—all working in concert. 

Welcome to Bastion Fiduciary. Saddle up.