Investment Philosophy

We feel it is imperative to develop a customized, written investment policy statement (asset allocation plan) designed specifically to meet the needs of each client. The investment policy is determined through inputs from both the client and one of our certified financial planners. Ultimately, the investment policy is designed based upon the specific financial goals and risk tolerances of each client. We use the investment policy as a road map to make future financial decisions. The investment policy can and will change to adapt to changes in the client’s situation or changes in market conditions.

Once an investment policy has been established, the specific investments are selected. One of our core investment beliefs is diversification through asset allocation. We believe investors should diversify their holdings between equities and fixed income. Equities should be diversified among large cap, mid cap, and small cap. They should be further diversified by style between growth and value and perhaps domestic and international. The stock market has proven over and over that different market caps and different styles go in and out of favor. However, timing when a sector will move in and out of favor has proven to be difficult if not impossible over the long-term.

Diversification through asset allocation will not hit "home runs." Because the assets are diversified and not focused, risk will be reduced. This permits the power of compounding to work because it lessens the likelihood of significant negative returns. Our belief is through appropriate manager selection and asset allocation, the overall portfolio can achieve above average returns with reduced volatility.

We also believe in rebalancing. Rebalancing by its very nature forces you to sell high and buy low. The tech wreck of 2000 and 2001 provides a vivid example of the benefits of rebalancing. Many investors reaped huge unrealized profits in the tech sector in 1999 and early 2000 only to see those profits evaporate and turn into losses later in 2000 and in 2001. Rebalancing forces the sale of outperforming asset classes and the purchase of underperforming classes. This philosophy is particularly well suited for tax deferred accounts because there is no tax incurred when appreciated securities are sold.

We utilize primarily no load equity mutual funds. This facilitates diversification and rebalancing.