Investment Philosophy
Investing in securities and the financial markets has always been challenging. There have been booms and busts in stocks, bonds, housing, currency, and commodities. The successful investors have been those who were able to grow their wealth in good times and minimize the down-side in challenging times. Asset allocation strategies and diversification have usually served clients well over time. We specialize in constructing and managing designed to meet our clients’ retirement and income goals as well as charitable, education and wealth transfer goals with confidence.
Investment Goals:
Our investment goal is to outperform the market by managing risk according to each of our 5 model portfolios. These portfolios range from Aggressive to Conservative. In our Aggressive Portfolio, our goal is to outperform the S&P 500 index while taking less risk to achieve those returns. In our Conservative Portfolio, our goal is to provide income and growth, while managing volatility. In all portfolios, we seek to manage risk through asset allocation and manager selection. In actively managed portfolios, we may seek to reduce risk by decreasing the equity positions and managing the interest rate risk (duration) and credit quality of the income portfolios. We encourage the placement of sell stops to help manage the downside risk of individual equity holdings. In a more volatile market, a defensive strategy may be advised to hedge certain positions.
Core Investing:
Core Investing is the strategy of owning investments over the long term and lowering risk through diversification. The investment goal is to outperform the market by managing risk according to each of our 5 asset allocation models. These models range from Aggressive to Conservative. In the Aggressive Allocation model, the goal is to outperform the S&P 500 index while taking less risk to achieve those returns. In the Conservative Portfolio, the goal is to provide a stable stream of income, while managing volatility due to changes in interest rates and credit quality. In some portfolios, we seek to manage risk by effective asset allocation and manager selection. In stock portfolios, we may manage risk by decreasing the position size of any one stock and increasing the number of positions, depending on overall portfolio size, and diversification within the sector allocation.
Active Management:
Active Management is the strategy to change the asset allocation of a portfolio depending on the level of risk in the market. Many different fundamental and technical tools are used to help determine the risk level. However, once elevated risk levels are identified, a change to a more defensive allocation may be advised. This can range from a shift in allocation from stocks to bonds, using defensive strategies to hedge the account, placing sell stops on stock positions, or simply selling some higher risk positions. The advice might be different for each investor and tailored to his/her individual portfolio, risk tolerance, and knowledge of the investment products available. The main idea is to preserve the portfolio so the client can be in a position to take advantage of lower prices when they come.
Communication:
Communication is critical. Clients are contacted whenever we feel important information or commentary needs to be communicated. Our clients are well informed of the decision-making that goes into recommended allocation changes. Clients receive newsletters and portfolio reviews.
Mission:
Our goal is to provide portfolios that experience less volatility than the S&P 500 while at the same time having much better returns over time, due to our careful, thoughtful process of selecting quality managers, and an ability to allocate funds based upon fundamental research and a strategic selection of investor-appropriate investments.