We work very hard to craft a unique portfolio that lets you live off your assets while minimizing risk and expenses. Our service is about vision, sound advice and strategies that result in a portfolio that performs and a financial plan that works for you. When you look at a portfolio, you may see just stocks, bonds and funds. We see deeper into layers of risk and return. We see structure that tells us what the potential risk/return is. We draw on a boatload of experience and that allows us to see the guts in a way that most people can’t. We believe this skill produces better results.  

We prefer to own individual stocks and bonds in a portfolio for two reasons. First, it helps to minimize the overall cost in a portfolio. Also, it allows us to control what we own.


How do we pick individual stocks?

Stocks are selected based on intensive research.  First, we identify industries that are benefiting in the current economic conditions.  Next, we look at our existing investments in that industry.  We decide what to keep and what to ditch.  Then we select other stocks that we find attractive.  We look for companies that have a significant advantage over their competitors, with strong cash flow, superior products and services, experienced and driven management teams and attractive financials.

In the stock market, industries are called sectors.  We attempt to goose investment results by over-weighting or under-weighting sectors based on our outlook for an industry.  If a particular sector is 9% of the stock market and we see good demand, we may invest 12% of a portfolio in that sector.  Vice versa, we will own nothing in a sector with weak prospects.   

In general, we intend to own 25 stocks in a portfolio. Viewing the stock portion at 100%, if we invest in each stock equally, then each stock would be 4% in weight.  We increase or decrease this amount based on each client’s risk/return profile and our outlook for that stock.  Low risk clients get smaller positions if it is a higher risk investment.

A company may look like a great fundamental investment opportunity but the price may not be attractive. In those cases, we put the company on our watch list waiting for some bad news to knock it down in price.  If it does, we evaluate the news before purchasing the stock.  We are long-term focused and are stalwarts in the face of temporary bad news.


How do we use individual bonds?

Depending on the client’s financial situation and the type of account we are managing, we will utilize various types of bonds in a portfolio. These may be corporate taxable bonds, tax-exempt municipal bonds, taxable municipal bonds, etc. We prefer to buy individual bonds for clients rather than bond mutual funds.  This allows us to precisely control interest rate risk (a.k.a. increases or decreases in interest rates).  Bonds act as ballast to provide a stable value portion in portfolios.  They have the advantage of providing a steady source of income.  We prefer to own bonds to maturity.  We only use bonds if they are appropriate for the client.   


Do you own any mutual funds or ETFs?

Even though we prefer to own individual stocks and bonds, we will utilize mutual funds and Exchange Traded Funds (ETFs) in certain situations. This is primarily when we want to have exposure to areas that we do not have the expertise to analyze.  Bio-technology is a case in point.