Asset Allocation

We believe the asset allocation model we choose for you is the foundation of your investment portfolio.  It is our job to match your objectives with the proper mixture of investment categories and individual investments.  The overall risk of your portfolio is dictated by the percentages we apply to cash & equivalents, bonds, domestic stocks, industry sectors, international stocks, emerging markets, gold, silver, commodities, currencies, etc.  As an example, if we are working with a more conservative client, we would allocate a larger percentage of the portfolio to less risky and more stable investments such as cash & equivalents or bonds.  A more aggressive client would be exposed to more equities and international areas.  In all cases, we feel it is imperative to have a much diversified portfolio to help minimize the risk of portfolio declines due to one position or one market sector suddenly becoming a problem because of an unforeseen negative factor.

Most firms have some sort of asset allocation model such as we have described, but where we are different is that we will frequently make adjustments to the asset allocation percentages based upon changes in market trends, domestic and global economics, and political policies.  This endeavor takes a tremendous amount of focus and daily monitoring to be successful.  Gone are the days when you can set up a static portfolio and hope for the best.  Smaller firms generally can be more nimble with their adjustments, thus, having an advantage in capturing momentum swings or protecting assets when markets are extremely weak.  These are precisely the reasons we have, by design, controlled the overall growth and size of our firm.  As such, we are happy to accept referrals or new clients who seek us out, but we do not proactively market for new clients via salesmen, seminars, promotions, etc.

The types of investment vehicles we currently prefer to use are no-load and no transaction fee mutual funds and exchange traded funds (ETF’s).  Since our system is designed to make frequent adjustments, it is imperative that we have virtually no costs to the clients for adding or exiting a position.  The advantages of the mutual funds are broad based diversification and professional management.  The advantages of the ETF’s are liquidity, diversification and extremely low costs.  We tend to use a mixture of both in order to take advantage of their individual strengths.

Understanding Our Asset Allocation Models