Investment Management

Our Philosophy

We often use an analogy to baseball to describe our investment philosophy. Success in baseball does not come from swinging for the fences in hopes of delivering a homerun. It comes from small achievements like singles and then strategically moving runners around the bases. It is better to have nine good players than one slugger. Like baseball, the harder you swing for investment returns, the more likely you will strike out and underperform. Many individual investors chase returns as witnessed in the late 1990s tech boom. Inevitably, the vast majority of individual investors' returns significantly lag the indices over the long run. An astute investor once noted, "investing is simple, but that does not make it easy." Much of the time, successful investing required buying when others are selling and spreading your investments rather than concentrating them on a few speculative ideas. Our philosophy, therefore, is governed by prudence and a value oriented investment style. 

Investment Process

Through our financial planning discovery process, we work with our clients to determine an appropriate investment strategy. This allows both the client and our firm to outline and understand the risk preferences and requirements that will enable us to tailor a portfolio strategy that meets the needs of the client.

Asset Allocation

The first and most significant part of the investment process is asset allocation. This involves strategically targeting a percentage of a client's portfolio to be invested in the three major asset classes; equities (stocks, stock mutual funds or stock ETFs), fixed income (bonds, bond mutual funds or bond ETFs) and cash (money market funds, t-bills or short term CDs). These targets are based generally on age, risk tolerance, and income requirements. 

Diversification

The portfolio strategy is further developed by allocating within asset classes to various sectors.  Since these sectors exhibit different risk and return characteristics, when prudently combined, they tend to reduce overall risk while improving returns in the long run. Examples within the equity asset class include value stocks, growth stocks, medium capitalization stocks, small capitalization stocks, international stocks and emerging markets stocks. Within fixed income, there are treasury bonds, inflation protection bonds, mortgage pools, corporate bonds, international bonds, high yield bonds and municipal bonds.

Portfolio Review

Financial markets are dynamic and investment opportunities are constantly being created. As a result, the portfolio may require adjustments. This may involve portfolio rebalancing back to the target asset allocation or subtle changes among sectors.  As directed by our investment philosophy, we will attempt to buy what is undervalued and sell what is overvalued.