Our Investment Approach
Our Goals
We perceive ourselves as “value” investors. As such, our goal is to attain superior long-term performance by acquiring securities or financially strong companies with understandable businesses run by capable management at market prices significantly below conservative estimates of their “intrinsic value.” In this pursuit, we conduct our own evaluations of individual securities and also invest in comparatively low cost, “no-load” mutual funds whose investment managers evaluate securities with value criteria similar to ours.
We strive to consciously manage risk. Every investment opportunity carries associated risks. An early step in the investment process is identifying these risks to the extent possible. The next step is to take appropriate actions to reduce the impact of such risks through techniques or products affording a measure of protection in down markets. None of risk management strategies can or do eliminate all portfolio volatility or protect against all losses.
Our Expertise
Our experience and that of the securities markets in general in 2008 was that in a liquidity crisis or a financial panic based upon other circumstances, the market prices of securities in various assets become highly correlated to the downside. In these circumstances, diversification and most other portfolio strategies offer little protection.
We are also “active” (rather than “passive” or “index”) investors. Based upon fundamental research and price awareness, we select the securities we think will perform best within the context of a client’s asset allocation and existing macro-economic condition. In contrast, a “passive” or “index” investor invests to match the proportion and performance of securities held in a specific index such as a “large cap” index or an international index.
Finally, we are “asset allocators.” For most clients, balancing one’s portfolio by allocating a portion to equity securities, an asset class that generally is more risky and potentially more rewarding than fixed-income securities (i.e., bonds), and allocating a portion to fixed-income or similar securities, is commonplace. Given the heightened volatility that has characterized securities the securities market since 2007, pure preservation of capital has become a prime consideration for some clients. Each client, however, has his or her unique circumstances as well as an individual level of preparedness to assume risk. All of these considerations enter into our asset allocation recommendations.