Investment Philosophy

We believe several things about capital markets that determine how we manage client investments: 

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  • We cannot predict the future, and attempting to guess what will happen with any investment or economic metric does not add value for our clients.

  • There are four major themes when managing a portfolio; returns, risk, taxes, and costs

    • Returns are given by the capital markets, and we have no control over them. Attempting to predict which investment will do better than another is a futile and expensive exercise. In finance, the practice of judging and picking individual stocks is often referred to as “active” or “tactical” management. We do not believe this practice is of any value to our clients.

    • Risk can mean many things. We believe that we can add value by working with clients to measure how much risk to take to get a better expected return. We work to manage risk for our clients and practice diversification, which reduces risk.

    • Taxes erode returns. Since we have some control over taxes, we focus much of our attention here for our clients.

    • Costs also erode returns. Reducing investment costs increases the investment return for our clients.

  • While we do not believe that traditional stock picking is of any value, we do believe that our clients should have a target allocation, and as capital markets change, we rebalance back to the target. This process of rebalancing is a simple and understandable way to react to volatility in capital markets. We believe the amount of risk a client accepts is tied to this target allocation and should be determined based on the client’s life rather than on what is happening in the economy. This style of investing is called strategic passive asset allocation.

  • Because of our independence, and because we are a fee-only firm, we have access to any and all investment products and vehicles that exist. That being said, we migrate toward solutions that are not “active” or “tactical” in nature, that help us control risk, and that are tax efficient and cost effective.