Our Investment Philosophy
Our Investment Philosophy which guides our approach to managing our clients’ portfolios is grounded in research and experience:
Markets are rewarding. Stock and bond markets have historically generated positive returns in excess of inflation compensating investors for providing financial capital. Of course, the past is no guarantee of future performance.
Markets work. Intense and incessant competition among millions of market participants aggregates the vast collective knowledge and expectations for the future of all market participants and drives it into security prices. Any individual trying to outsmart the market is competing against the extraordinary collective wisdom of all other market participants.
The future is unknowable. The world, including financial markets, is highly complex, dynamic, and adaptive making it impossible to predict the future in a manner upon which profitable investment decisions can be consistently made.
The past is a good guide. Rational expectations for the future can be built upon a well-informed understanding of the past in addition to a strong sense of economic intuition.
Portfolio structure drives performance. The primary driver of a portfolio’s performance is how it is allocated across various types of investments. Research has identified certain investment characteristics which point to differences in historical returns which can be used as a roadmap to potentially increase returns.
Cycles happen. Asset classes, styles and strategies all come in and out of favor over time. No cycle or trend can or will go on forever.
Diversification is your ally. Portfolios that are well-diversified across multiple asset classes, markets and styles can provide a more stable return experience.
Valuations matter. The price paid for an asset has a significant impact on the potential future return on the investment. No asset is so great that it’s a good investment at any price. Few assets are so bad that they can’t be a good investment if purchased cheap enough.
Costs matter. Every dollar paid in fees, expenses, commissions, etc., is a dollar less in return earned. Keeping costs low allows investors to keep more of the returns generated by the markets and increases their chances of outperforming.
Discipline is critical. Markets go up and down. Reacting emotionally or impulsively to current market conditions can lead to poor investment decisions at the worst time. A disciplined and patient long-term investor can potentially avoid the deleterious impact of buying high and selling low (in either order) and capitalize on compelling opportunities as they present themselves.