Method of Analysis
We use only passive analysis as the foundation of our investment approach. This method is based on the belief that financial markets are efficient and that attempting to outperform them through stock picking or market timing is unlikely to be successful on a consistent basis. Instead, our strategy focuses on investing primarily in low-cost exchange-traded funds (ETFs) that track broad market indices. Further, we ask each client if they have specific interests or industries that they want to invest in and then tailor those ETF purchases accordingly. For example, if a client has interest in technology and wants their portfolio weighted toward technology companies, we will recommend an ETF that tracks the broader market but also has a minor allocation for technology companies. If the client does not have a preference, we will recommend specific ETFs that mirror the S&P 500. We analyze long-term economic trends and historical asset performance to choose those ETFs, and we feel that index-based ETFs offer the best approach to investing in a passive long-term manner.
Investment Strategy
Our investment strategy is grounded in a buy-and-hold philosophy. We recommend portfolios built with index-tracking ETFs diversified across asset classes including U.S. equities, international equities and fixed income. Each client's portfolio is tailored to their financial goals, risk tolerance, and investment time horizon. We do not engage in market timing, frequent trading or speculative strategies. Instead, we periodically review and rebalance portfolios to ensure alignment with target allocations, while maintaining a focus on tax efficiency and cost minimization.
Risk of Loss
Investing in securities involves risk of loss, including the possible loss of principal, that clients should be prepared to bear. Our passive strategy of investing in exchange-traded funds (ETFs) that track broad market indices aims to reduce unnecessary trading and cost drag, but it cannot eliminate market risk. Specifically, the value of ETFs we recommend will go up and down as the market index the ETF follows goes up and down. The market index and thus the value of ETFs we recommend will go up and down due to the condition of the overall economy, interest rate shifts, geopolitical events, and other external factors. These are all market-wide risks that will influence ETF value. However, we emphasize long-term discipline and diversification to help mitigate these risks by advising our clients not to sell during market downturns but rather to hold for asset appreciation over the long term. The ETFs we recommend offer a passive way to participate in the broader market, but they do not insulate our clients from loss. Clients need to be prepared to bear the risk of loss of principal when investing in ETFs.