We believe in free markets and we believe that they are relatively efficient. In simple terms, this says that the prices on traded assets already reflect all known information and that undervalued securities and overvalued markets cannot be reliably found. Human behavior, national and international events, natural catastrophes and a host of other variables compound ambiguity in the market place. The only real information that can change the prices of these assets is unknown, and therefore unpredictable by any individual or group.

In today’s world, information travels faster than ever……..almost at LIGHTSPEED. It is foolish to believe that any individual or group could capture returns by “being in the know”…or at the very least extremely difficult. And hey, by the way, if they could, do you think they’d capture it for you?

WE WON’T ARGUE the fact that gains have been made by people in the know. However, in today’s society we don’t have to go far to find unscrupulous and illegal activity….and people who have suffered the price for it. We believe our clients want to stay on the right side of the law…and so do we.

We believe that all living activities involve risk. Non-investing activities can have an impact on a client’s ability to manage risk and therefore needs to be considered during engagement processes. The more our clients know and understand the interrelationships between risk and return, the greater the chance for success.

We believe in Modern Portfolio Theory (MPT). MPT is a term refers to a body of academic research that earned a 1990 Nobel Prize for its contributors. The work of one of these contributors, Dr Harry Markowitz-University of Chicago, showed that when combining low correlated assets in a portfolio, the portfolio’s return could be increased while its risk (or volatility) is decreased. This is one component of diversifying a portfolio. Further academic work has shown that the majority of a portfolio’s return is provided by asset allocation and very little is provided by the selection of the securities (stocks, bonds, funds, etc.) or the use of market timing. EVEN MORE ACADEMIC WORK has shown that, overtime, riskier asset classes provide higher returns. We believe that investors are “risk adverse”. In simple terms this means that given a choice, investors tend to select the highest returns for the least amount of risk.

We believe clients need to understand their portfolios and how they work. We spend a lot of time determining what levels of risk you are willing to assume, determine an appropriate asset allocation and then build the portfolio with low correlated assets. This helps diversify the portfolio. At times, a well diversified portfolio has one asset class that may be losing “big time” while another is a “winner”. The death of diversification is our natural inclination to run away from the looser, when in fact the combination of these winners and losers actually helps alleviate the risk in the portfolio.

The weighting of our asset classes is supported by objective academic research and may differ significantly from other investment managers. In addition, these weightings may change periodically as new research uncovers additional risk dimensions, new asset classes become available or as fundamental asset class correlations change. We do not believe in stock picking or market timing because we find it highly unlikely that we can consistently predict winning stocks or know about future market movements.

We make no attempt at predicting the future, we do not change portfolios based on any predicted market change. However faster appreciating asset classes, over time, may exceed their target allocations. This could lead to an unbalanced portfolio and the potential for more volatility or risk. For this reason, we review portfolios for significant deviations from their targets no less than quarterly and rebalance.

Our beliefs lie in mostly passive activity. Now that is contraire to most of what investors see and hear everyday. And to be honest, it’s hard stomach your best friend’s story about his million dollar stock pick, or #1 fund, however he’s probably not telling you the whole story. Active management, which includes stock picking, market timing and the idea of predictability, can often cause excessive trading which results in higher expense rations, brokerage commissions, taxable gains, and bid/ask spread costs including a considerable number of hypothetical costs which are beyond the scope of this topic.

SO NOW WE’VE TAKEN ALL OF THE FUN OUT OF IT! Yep, that means that we don’t set in front of the T.V. trading everyday…..which for some could be boring and unprofitable. We believe that passive funds have inherently low turnover, thereby minimize the potential of taxable gains and internal trading costs. We believe that the cost efficiency of these funds give our clients the ability reduce costs and improve net return. We believe that our clients are best served by providing market returns.