"Wide diversification is only required when investors
do not understand what they are doing."
- Warren Buffett
We are passionate about understanding our clients’ unique financial situations and thoughtfully designing, implementing, and managing coherent and tax-efficient strategies. We view ourselves as Chief Financial Officers executing strategically built portfolios for our clients utilizing the most appropriate investment vehicles available, whether they are 3rd party managers, mutual funds/ETFs, or individual securities.
While no one can control the markets, we can control the process we apply in seeking good risk and inflation-adjusted returns on capital. While a sound process will never eliminate bad outcomes, we aim to apply discipline and appropriate risk mitigation to help soften the downside. We view everything through a value lens because we believe this increases the odds of long-term investment success by dampening volatility and emotions.
We believe volatility creates dislocations that present tactical investment opportunities, dependent on portfolio size, risk budget, and our client’s unique financial situation. Special situations can be industry, company-specific, or geopolitical events that cause misunderstanding, mispricing, and/or tailwinds that create the potential for superior risk-adjusted returns.
History suggests there are only two reasons to own bonds:
⓵ To hedge against equity risk.
⓶ To provide a reliable income stream.
However, actions by the Federal Reserve since the global financial crisis (GFC), akin to keeping their fingers on the scale, distorted real interest rates and price discovery, and have us questioning that historical premise. One thing we are certain of is that bonds detract from real (after inflation) returns, so if the risk budget allows, we favor income-producing stocks over bonds.
