Investment Philosophy

I believe that . . .

  • In the short term, investment markets are unpredictable. Historical trends are more discernable over long periods of time. Research tells us that a consistent exposure to various asset classes over time determines the majority of a client’s return. Therefore, we believe in staying the course in a properly allocated portfolio during times of high market volatility and avoiding market timing.
  • Typically, emotions—fear and greed—have driven investing decisions (e.g., late-90s dot-com boom/bust, 2008 real estate bubble). Many poor investment decisions have been made based on the belief that current trends will continue: rising markets will continue to rise and declining markets will continue to decline. My job is to manage emotion and risk by using strategic and tactical allocation strategies, as well as rebalancing client accounts.
  • Investments should be kept simple (i.e., stocks, bonds, mutual funds, CDs, etc.) Clients need diversification, such as U.S. equity: large cap, mid cap, small cap; international equity: both developed and emerging markets; U.S. fixed income: short, intermediate, and long term; and international fixed income. Many clients don’t need private equity or hedge funds. Alternative investments tend to be illiquid and may create tax reporting problems that can be very frustrating to clients. They also tend to have high internal fees along with very little information as to performance and regulation.
  • Investors must have an investment plan based on time horizon and risk. A risk assessment program is used to determine appropriate asset allocation based on a client’s time horizon and acceptable risk. A core investment strategy is used for a select portion of the client assets. Then a search is run to determine the appropriate products to fulfill the allocation.
  • Expected rates of return should be reasonable and realistic. History has shown that equities have tended to outperform bonds over time, and bonds have tended to outperform money market accounts. For many investors, income goals should generally represent 4% to 5% of the portfolio value to allow for short-term volatility and long-term inflation.
  • While we firmly believe that investment costs are a concern in the absence of value, we also recognize the impact that expenses can have on returns. Therefore, we believe they should always be taken into consideration and minimized as much as possible.

Investors should note that diversification does not assure against market loss and that there is no guarantee that a diversified portfolio will outperform a non-diversified portfolio. Alternative investments are not suitable for all investors as they involve substantial risk. Investors must meet specific suitability standards before investing and understand these investments are for a long-term investment horizon. Past performance is not indicative of future results.