Our Investment Philosophy

 Our Investment Philosophy

All investing is for a purpose. You may want to save for college for your children, put an extra room on your house, buy a lake house, or have a great retirement in Houston. The time frames associated with each of these objectives helps determine the level of Risk you could be willing to take and the payment stream ultimately necessary to meet the need. Do you need a single lump sum or a steady stream of income that gradually grows with inflation? Once we have defined the use for the investment we then begin to define the strategy.

The first step in our investment philosophy is to define the level of Risk you are willing to take to meet the need. In addition to timeframe there are many factors affecting your Risk tolerance. One of the most important elements of risk tolerance is understanding what level you are comfortable with.

The second step in our Investment Philosophy is Asset Allocation- spreading your investment dollars across different asset classes to help manage risk and enhance returns. The goal is to select a mix of asset classes that could help you meet your long-term investment goals. Stocks (equities), when held over a long period of time, have proved to be the investment class with the greatest growth potential (Stocks, Bonds, Bills, and Inflation (SBBI) Yearbook, Roger G. Ibbotson and Rex Sinquefield, 2009). However, as recent market performance has amply demonstrated, stocks can be extremely volatile in the short term. Maintaining a long term perspective and insuring good diversification can help mitigate the volatility of the overall portfolio.

The third and final step is to not just ride the roller coaster of the market up and down over time. Instead Rebalancing the portfolio back to the selected asset allocation on a routine basis can result in capturing the positive market results and reinvesting those dollars back into the lesser performing asset classes.

Discipline is required to ensure that rebalancing takes place while also insuring that the investments are reviewed for quality and diversification. As needs for the assets change it is important that the investments also change.