Constructing portfolios that reflect each client’s objectives
Unlike many advisors, our team personally constructs and actively manages client portfolios. Every portfolio is built with individual stocks and bonds, customized for each individual client’s circumstances.
We are responsible for each stock or bond in the portfolio being successful. Our team regularly listens to earnings calls for the companies we own to gain an understanding of these organizations.
We are transparent with clients about the stocks and companies held in their portfolio. During review meetings, we take time to analyze each of them with our clients and evaluate the possible consequences if there was a market decline. Additionally, we wouldn’t recommend an investment we wouldn’t own ourselves, and, in fact, we own the same investments in our own portfolios.
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Our investment style in equities is a multi-cap strategy, structured for each client. We do not run commingled funds. Every portfolio is customized and diversified, and we typically have 25 to 30 companies in each. We are not market timers, so we are fully invested with small cash reserves. We spend a great deal of time understanding our companies, and talking with their executives and their competition. Our goal is to own companies for three years or longer. If we are wrong in any selection, we attempt to cut our losses quickly.
Our decision-making process is qualitative, and all team members are involved in the process. Many portfolio companies are names we have known for many years and have owned off and on at different times during a market cycle. Each is reviewed monthly and continuously monitored.
Diversification does not guarantee a profit nor protect against loss.
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If there is a desire to have exposure to international markets, we identify and select index funds that include both developed and emerging markets, and meet our benchmarks in key areas such as valuation, risk, momentum and growth.
International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.
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We believe that trying to fathom the direction of interest rates is a futile exercise. Therefore, we have developed a strategy to invest fixed income assets on a laddered basis, with a duration that is intermediate. We like to purchase bonds and hold them – we rarely sell bonds unless there is a concern regarding credit quality or cash flow.
The intermediate duration of the portfolio gives us the flexibility to adjust to changing rates without significantly changing cash flows. Predictable cash flow and minimum price fluctuation are always our goal in this type of portfolio.
We use fixed income for stability, not growth. Most of the time, we are interested in high-quality bonds, but we are not reluctant to use less-than-investment-grade bonds in the right opportunity.
Fixed-income securities are exposed to various risks including but not limited to credit (risk of default of principal and interest payments), market and liquidity, interest rate, reinvestment, legislative (changes to the tax code), and call risks. Non-investment grade bonds involve greater risks and are not suitable for all investors.
