Guided by our founding principle, we apply an institutional level of analytical sophistication to guide all decisions affecting the portfolios of individual investors.
No Artificial Boundaries – Many managers confine themselves to a narrow methodology, such as “value” or “GARP” (growth at a reasonable price), or to a limited sector of the equity universe, such as large or small cap. We believe that we can generate better returns by selecting the most promising stocks in each market segment, and so we look as broadly as possible.
Rigorous Price Discipline – Other managers may focus too narrowly on measures such as PE ratio, return on equity, price to book value, etc. We go a step further and rank our universe of stocks using a wide variety of growth and value metrics. We also estimate the percentage return that will be generated by earnings and forward valuations. We believe that this specificity leads to a greater degree of price discipline for both growth and value stocks.
Systematic Risk Controls – We strive to lock in profits by limiting drawdowns, sometimes with stop orders. We seek gains that are long-term wherever feasible. Combining fundamental judgment and probability-based models, we re-evaluate positions, cut them if necessary, and redeploy funds into newly identified stocks with more significant upside potential.
In our balanced and fixed income accounts, we build portfolios of bonds that are safe in terms of credit, sound in terms of structure, and maximal in terms of yield given the first two criteria. Bonds are not meant to be a tool for speculation. They should reduce overall portfolio volatility and provide higher income than either stocks or cash.
We use cash as a tool. In addition to income and liquidity, it provides the ultimate in stability at times in which market valuations indicate a less than 100% investment posture is warranted.