portfolio design
Successful outcomes for the families we serve require mastery of both the Art & Science of our profession. The human connection and the planning process lays out the map (Art), and the portfolio is the vehicle to get us there (Science).
long-term
low cost
methodical
We believe accessing the broad market through a prudent and well diversified allocation represents the most efficient means to capture long-term economic growth for most investors.
an illusion of complication
Since the opening of the New York Stock Exchange in 1817, the brokerage industry profits tremendously from this notion of asymmetrical information. They sell the idea that they somehow have access to data that their customers do not.
This has all changed.
simple works.
It takes a confident advisor to take a seemingly complicated task, strip away all but the essential, and simplify it.
An optimal portfolio is one thing, but keeping a client on the right path, for decades, throughout the emotional ups and downs with a clear and comfortable vision of their financial well-being is the greater challenge.
That's where we can shine.
investment principles
Value creation happens when interesting and important problems are solved.
Problems are solved by innovative companies but figuring out which specific companies are successfully breaking molds while still managing their finances is a full-time job with a lot of competition. To seek ownership in those companies without guesswork, we suggest broad, diversified stock ownership on an aggregate level at the lowest possible cost.
Lending money offers less opportunity for growth, since bonds are debt instruments. Owning a bond means you collect linear interest while the opposite side of that transaction uses that cash to create compound value beyond the bond yield.
Historically, this has so far held true.
Still, bonds serve an important part of our portfolios.
We use bonds to reduce short-term variability and capture a modest yield along the way.
Notice that in this context, we're not using the word Risk.
In our industry, Risk and Aggressive are the most commonly used words to describe stock portfolios. But these descriptive terms are often used incorrectly.
Four investors will offer five definitions of risk, but we see risk as the probability that an investment will result in permanent loss of value.
One single stock is risky, it can go to zero. While the total aggregate economy is very unlikely to hit zero. The debate on Risk vs Variability is a behavioral one, meaning: "When is liquidation required?" or "Will I panic along the way, locking in a permanent loss?"
Instead of using Risk, we often prefer the term Variability.
This is a more accurate way of describing the trajectory by which a portfolio moves through the various economic cycles.
Some clients have the emotional fortitude and time horizon for increased variability. Some do not, and that's perfectly natural.