Our investment approach is structured around five principal risk factors: prepayment, convexity, volatility, spread, and interest rate. The compensation for bearing these risks varies over time, reflecting the market's expectation of the future. As value investors, when the market's expectation of the future is extreme, we structure portfolios to benefit should the future evolve closer to historical precedent than to these extreme forecasts. When using proprietary models, we endeavor to understand and adjust for their weaknesses. This process ensures that our final valuation of securities is forward looking and not limited to historical relationships.