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Investment Philosophy

When it comes to investing, knowing what to expect is crucial. Here are some things to keep in mind as we move forward together…

The single biggest risk to a portfolio is the investor. Markets will rise and fall, economies will grow and crater, black swan events will occur. How investors react to these events, rather than the events themselves, will ultimately determine the level of success within the portfolio. We’ll be there to guide you.

Success in investing is measured by the plan. Investors can be tempted to focus exclusively on rate of return, but a successful portfolio is one that is in line with a financial plan and the goals stated in that plan. We will always remind you that the plan should dictate the structure of the portfolio, rather than an arbitrary target return.

The financial news media will in no way provide insights as to asset prices. It will, however, increase levels of stress and panic. Their explanations will sound good and provide false order for what is often random. We will present facts, not opinions.

Studies show that market timing is not a successful long term approach. At some point, many investors will want to follow a hunch rather than follow a process. We will remind you of the pitfalls of such a strategy.

Our investment strategy is not exciting. Our clients will not have any cocktail party fodder within their portfolios to regale their friends with. That doesn’t mean the portfolio is not working. A portfolio is working if it is in line with a financial plan and the goals stated in the plan. We will always remind you that the plan should dictate the structure of the portfolio.

Even the most logical of investors can get caught up in emotion. By design, asset allocation means certain portions of the portfolio will be outperformed by other portions. At any given moment, investors can find themselves in love with one portion of the portfolio and unhappy with another. This can lead them to want to change tactics. We will take the long view and stand firm.

Portfolios decrease in value. Hindsight is always 20/20, and downturns always seem so obvious in retrospect. Invariably someone else “got out” just in time (though they will inevitably miss the run up when the market turns around). We will hold your hand and keep you on the track to successfully accomplishing your goals.

Volatility is easily confused for risk. Equities markets are exceptionally volatile. That is why, historically, they have produced a better return than bonds and cash. Money is purchasing power and in the absence of volatility purchasing power will eventually whittle away. We will encourage you to embrace the volatility.

While rarely obvious in the heat of the moment, investors can easily let their emotions guide their actions even if those actions run counter to an agreed upon framework. This may feel right and may even help the short run, but such behavior more often than not leads to diminished long term returns.

It is our mission to save investors from themselves and other outside forces that may drive them to make irrational decisions regarding their portfolios. The purpose of walking you through these inevitable situations is to prepare you for what lies ahead. By establishing a mutual understanding of what can be expected from this relationship, we can work together to help you Achieve Financial Peace of Mind™.