Investors fall into two basic categories: active investors or passive investors. Active investors believe in trying to time the market and pick winning stocks. Passive investors believe in capturing the returns markets provide and doing so in a low-cost, tax-efficient manner.

While few (if any) would argue that markets are perfectly efficient, we believe that markets are largely efficient. We believe there is no feasible way to determine which stocks will rise, nor is there a way to identify managers who can. Instead, we believe that the most prudent way to build client portfolios is to tailor the portfolio to match the investor’s ability, willingness and need to take risk. We also believe in constructing these portfolios in the most low-cost and tax-efficient manners possible.

Our approach to investing is based on academic research. We subscribe to Modern Portfolio Theory (MPT), which has four basic concepts:
 

1. Markets process information so rapidly when determining security prices that it is extremely difficult to gain a competitive edge by exploiting market anomalies.
2. Over time, riskier assets provide higher expected returns as compensation to investors for accepting greater risk.
3. Adding high-risk, low-correlating asset classes to a portfolio can actually reduce volatility and increase expected rates of return.
4. Passive asset class fund portfolios can be designed with the expectation of delivering over time the highest expected returns for a chosen level of risk.

MPT also shows us diversification within and across asset classes is of utmost importance. Investing can be risky enough. Taking additional risk by placing assets in just a few investments is not a prudent way to achieving financial goals (especially since undiversified risk has not resulted in superior expected returns). We build portfolios that diversify within and across asset classes to lower the risk of portfolios while maintaining similar (or even the same) expected returns.

We believe our approach fosters a relationship grounded in fiduciary obligation, while effectively incorporating academic evidence on how markets can be used to pursue financial independence.

For a free consultation and to speak with one of our investment advisors, please call 866.545.8816 or submit our contact us form.

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