Thoughts on Investing

Historically low interest rates and high market valuations may make investing more treacherous in the future, we believe having a proper investment allocation can provide protection during market downturns and maximize long term returns. 

We use focused investments in single securities and alternative asset classes in order to seek improved diversification and higher risk adjusted returns. The added benefit of this strategy may be to reduce “fees on fees” which can lead to an overall reduction of costs to our customers. In addition, we persistently monitor potential market risks and may reduce equity exposure which may help to avert significant losses during market corrections.

As a starting point, our investment philosophy is to protect the purchasing power of client assets relative to inflation. Generally, client portfolios are invested using a combination of strategies described below. Client income needs are one of the determinants as to which of the strategies will be employed to meet their specific goals.

Growth

The Growth strategy is defined as a portfolio which has a written investment policy allowing the portfolio manager to invest more than 50% of the portfolio in equity securities. The growth strategy has the long-term goal of minimizing losses in years when the S&P Total Return Index is negative and providing growth when S&P Total Return Index is positive. The benchmark for the growth strategy is the S&P 500 Index Total Return Index.

Preservation of Capital

Preservation of Capital is defined as a portfolio which has a written investment policy allowing the portfolio manager to invest more between 25% and 50% of the portfolio in equity securities. The Preservation of Capital strategy has the long-term goal of preserving capital relative to inflation with the objective of provide returns higher than the CPI (all-urban consumer price index) while providing some growth when equity markets are accommodative (hence the inclusion of the S&P Total Return Index). The benchmarks for the Preservation of Capital strategy are the Consumer Price Index and the S&P 500 Total Return Index.

The non-equity portions of the portfolios that utilize the Preservation of Capital and Growth strategies are invested in fixed income securities and cash equivalents. At any given time the portfolios in either strategy may have the same equity exposures if I have a negative equity outlook. However, if we have a positive outlook for equities, portfolios using the growth strategy will generally have higher equity exposure than those using the Preservation of Capital strategy. Portfolios utilizing either strategy may contain different securities depending on when management began, legacy positions held, and other factors. The portfolios are invested to reach a certain equity exposure, but may not contain the same stocks.