Philosophy

“ARE YOU READY FOR AN INVESTMENT AND FINANCIAL GROWTH STRATEGY THAT IS AS UNIQUE AS YOU ARE?”

The following principles and convictions will inform the investment recommendations that we present to our clients:

We believe that investing in stocks requires a time horizon of five years or longer. Investors who will need access to their funds within five years should not be in the stock market. As we experienced from 2008 to 2010, stocks are capable of delivering little or nothing in terms of returns for an entire decade.

Asset allocation is the most significant factor in determining our long-term investment performance. Asset allocation refers to the way you divide your investments between stocks, bonds, cash, and other investments.

Expenses and fees must be carefully managed. We believe that fees and expenses can have a negative impact on a client’s wealth over a long period of time For example, if two investors with $100,000 are able to earn an average of 9% per year over a 20 year time period, but one investor chooses a higher cost investment that assess an extra 1% per year in fees, the investor with the higher costs will have $94,345 less at the end of the 20 year period.

We do not believe in market timing, which is a strategy that seeks to move in and out of the market in anticipation of either upward or downward market movements. Few (if any) investment professionals have over a long period of time demonstrated their ability to consistently add value beyond a buy and hold strategy. We believe in controlling risk through prudent asset allocation strategy, not by attempting to time the market.

We believe that there is a role for both active and passive investing strategies. To clarify, “active” management is an investment approach where fund managers choose securities based on research, judgment, and financial analysis. “Passive” management is a buy and hold strategy that seeks to provide broad market exposure and typically tries to replicate the returns of the designated index (like the S& P 500). Passive investors make no attempt to exclude or include stocks in their portfolios based on criteria used by active managers. For many investors, we recommend a core plus satellite investing model. Conventional wisdom holds that the purpose of core portfolio holdings has been to harness the long-term appreciation potential of traditional assets such as large-company stocks and high -quality bonds. The goal of asset allocation has been to strike a balance between these two low correlation asset classes that optimizes their risk-adjusted returns.

However, following the economic crisis of 2008 and early 2009, we believe that there are three key factors that need to be considered in constructing the core portion of investors’ portfolios. These factors are: historically high volatility, historically low interest rates, and renewed awareness of the potential for historical correlations to break down. In this environment, traditional holdings – especially long only stocks – may be too volatile for many investors, especially those nearing or in retirement. We believe that post-crisis core portfolios may benefit from some revisions to traditional asset allocation, and believe that hedge equity, global fixed income, and risk managed alternative investments may be appropriate for many investors.

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