We work tirelessly to make the best investment decisions we can, with our clients’ best interests at our core. No matter how smooth or how rough the sailing gets, our lines of communication are always open.
We know that this year’s winning investment is often next year’s loser. We know that markets are most dangerous when the majority of investors ignore the risks. And conversely, we know that markets are most appealing when the majority of investors are too scared to invest. We know these things because history has taught us these lessons time and again. We will maintain this perspective despite the level of “noise” we hear from those with no vested interest in our well-being.
We also know that most of the investment "news", which is often the only information people consider, is entertainment and not intended to help you make better decisions. Similarly, marketing should not be confused with education.
The long term benefits of patience and diligence with regard to your investment strategy cannot be overstated. Armed with a commitment to long term results, you avoid chasing tips and rumors, thereby buying and selling at the wrong time. Misreading market events and the strong emotions that can lead many investors into the classic “buy high and sell low” behaviors, that cost so much in volatile markets.
Asset allocation is at the core of determining an appropriate risk / return and asset allocation profile. These dimensions include the well-accepted idea that stocks provide higher returns than bonds; that small-cap stocks provide higher returns than large-cap stocks; and that value stocks provide better returns than growth stocks. Finally, we think it is important to focus on the aspects of investment management that can be controlled:
- Let markets work for you
- Consider expenses and turnover
- Diversify and rebalance
- Stay disciplined
1. Prudent Management of Risk
It’s an unavoidable truth that all investing involves some degree of risk. Many people focus strictly on short-term fluctuations in value (market risk), but keeping up with rising prices (inflation risk) over time is critically important. Our task is to help clients achieve their objectives while taking no more risk than necessary.
2. Focus on Costs
Taxes and expenses have an unquestionable impact on investment results. They also happen to be two areas where we have considerable control. As a result, we focus on both intently and strive to minimize their effects and costs.
3. Asset Allocation and Diversification
Investing would be quite simple with perfect foresight. Simply pick the single investment that will do best in the future! Unfortunately, we all know it’s not that easy. The future is unknowable and should be treated as such. A portfolio should be structured to withstand whatever the future might bring, and proper asset allocation and diversification are the logical ways to approach an uncertain world.
4. Valuation Matters
Markets can (and do) drift away from a reasonable estimate of long-term fair value, and the risk/return tradeoff can become distorted. When this happens, maintaining a static allocation to an asset class just isn’t logical. When warranted, we will adjust exposure to areas we consider to have an unfavorable long-term outlook. We are not market timers or short-term traders, and we make no attempt to predict market tops or bottoms (or even direction). Our approach is based on valuation sensitivity, focusing on the long-term investment opportunity available for each asset class.
While a “broker” at a brokerage firm is often limited to their inventory, as an independent advisory firm, we have “universal access” to investment products. We invest ourselves in the same products we recommend to our clients. Our goal is to limit expenses and only pay for active management when its value has been proven long-term.
No strategy assures success or protects against loss.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.