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Our general investment approach is based on a long-term outlook but we do not blindly follow a “buy and hold” approach. In fact, we are opposed to it in the current market environment. We pay attention to market cycles and we adjust your allocations accordingly. We include value, growth, and income oriented investments, and diversify among large and small cap stocks, bonds, and foreign securities. To keep costs down, this is done primarily with no-load mutual funds and Exchange Traded Funds but we also include individual stocks and bonds, in accounts at a top notch discount brokerage firm.
We recognize that markets have cycles. In a long term bull market such as the 1990’s, the cycle swings are mild and most investors can get by with a “buy and hold” approach. However, in a long term bear or sideways market, which we believe we are in now, the volatility is more pronounced so it is more prudent to change the allocation of your investments accordingly.
Markets go up and markets go down and you need a strategy for dealing with both scenarios that won’t keep you up at night. We don’t pretend to know exactly when these ups and downs will occur but when the market appears to be high, we take some risk off by reducing your allocation to stocks and vice versa when the market declines. We have no problem moving to cash when necessary to protect our clients’ portfolios. This strategy has served our clients extremely well in recent years.
Exactly how much your allocations change will depend on your ability and willingness to take risks, i.e. your “risk personality”, as identified during our planning meetings. For example, if you are a conservative investor, we would reduce amount of stocks in your portfolio when the market’s upward momentum slows down. In other words, we would take profits a little earlier than someone who is less conservative.
What makes us different is that we provide on going monitoring and review of your portfolio and we do so in an objective fashion, free from the mandated investment policies dictated to advisors at large brokerage firms or banks. Our financial planners work for our clients, not for commissions and not for some large Wall Street firm.