Investment Strategy

While modern portfolio theory, asset allocation models and the buy-and-hold strategy have and should continue to play an important role in investing, the 2008 financial crisis showed that these and other investment bedrocks were not the panacea to managing portfolio risk as originally thought. As the crisis unfolded it reinforced the tenet that there are times that risky investments should be “rented” rather than owned. As such, a flexible strategy, one not grounded by unyielding expectations that markets would behave as they did in the recent past, has proven to be instrumental during these tumultuous times. In addition, while we remain optimistic about the future, we feel that the crisis and resultant global Central Bank’s monetary response has created even more risk and uncertainty. Consequently wealth preservation, rather than the more risky objective of maximizing returns, should be investor’s paramount goal for the foreseeable future.

Our strategy starts by creating an investment roadmap utilizing the client’s risk tolerance balanced against macroeconomic, political, fundamental economic and technical analysis. Once the approved plan has been implemented, ongoing reviews and analyses of the markets and market influencers are completed. As our flexible approach allows, when an indicator is triggered and a strategic change is needed, tactical modifications are made to portfolios. It is important to understand that we are not traders or trying to create unnecessary taxable impacts from making portfolio adjustments. Instead we feel that the disciplined process of taking profits to reallocate into lower risk investments overrides the potential negative taxable consequences and continues to be the best way to achieve the underlying goal of preserving one’s assets.

As we move forward along the path to recovery it is clear that the changing times require adapting your investment approach. Endless opportunities have and will continue to present themselves but not necessarily in the traditional areas. As such, it is imperative the strategy used be flexible and grounded in today’s reality to capitalize on what is being presented rather than being stuck in the broken models and theories of the past. The flexible strategy we advocate and implement most importantly preserves wealth but also provides the opportunity to create it in the face of today’s severely turbulent economic times.