Philosophy - Process
We believe that we best serve our clients’ interests by adhering to a well-disciplined, long-term investment program that focuses on after tax returns and steady capital growth. Such a program, by definition, does not attempt to maximize short-term performance, which would entail much greater risk, but rather attempts to optimize long-term performance.
Value investing is a philosophy of buying securities priced less than their intrinsic value. Intrinsic value is determined by the discounting of all expected cash flows at a rate commensurate with the risk of the investment, and it is an estimate of the price an investor would be willing to pay for the business in a private, "arms length" transaction.
Our philosophy is based on the following premises:
- Stock prices fluctuate more than the underlying “intrinsic” company value,
- Stocks selling for less than their underlying value will eventually adjust to correct this divergence,
- Identifying and purchasing the stock of companies selling for less than their underlying value will result in superior returns with less risk, and
- Stock investments should only be made from the perspective of a long-term owner of the underlying business.
If we wouldn’t want to own the business, we don’t invest in the stock.
To out-perform a benchmark index, such as the S&P 500, the portfolio holdings must have some combination of superior attributes. In the simplest form, these portfolio attributes are as follows:
A) Higher Growth – must grow faster than the index
B) Lower Value – must be purchased cheaper than the index
C) Higher Yield – must yield more than the index
Empirical evidence has shown that value investing outperforms competing strategies over a full market cycle.
Investment and Risk Management Process
We have a proven process focused on advancing your objectives. You know what your financial goals are, and our disciplined approach can help you get there.
PORTFOLIO DESIGN: Relative Value Asset Allocation (ReVAA)
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