Our Approach
In many cases, we manage all or most of our clients' money, which implies a high degree of trust. It also invests us with a greater fiduciary responsibility, one that emphasises absolute rather than relative performance. This affects our culture and the way we look at investing, which can be summed up in a set of basic investment principles:
- Investing in companies that are out of favour and undervalued relative to their assets, earning power, or growth rate, has the highest potential for
generating consistently superior long-term returns.
- We invest for the long term and choose to view stock market volatility as primarily a short-term phenomenon.
- As some of our clients rely on our investing to fund their lifestyles, we try to maintain higher cash reserves to insure our ability to meet their
needs. This also tends to reduce a portfolio's vulnerability in a declining market.
- We avoid speculation and resist fads. Sometimes the urge to speculate on the latest investment trend becomes overwhelming…the lure of easy money
is very powerful. We consider it our responsibility to stand against these tides when they arise because we know how rapidly and devastatingly
they can turn.
Our Investment Philosophy
Our primary investment objective is to preserve the long-term capital of our clients from the erosion caused by the combined forces of inflation and taxes which, over the long haul, is a significant challenge.
Most clients have at least two goals for their capital. One, they depend on an income flow to supplement or provide entirely for their daily living and, two, they desire to transfer their wealth to future generations. Financial history shows that of all asset classes, the one best equipped to preserve capital over long periods of time is equities.
But equity investing does expose our clients to short term market volatility. While this volatility evens out over the long term, the short term gyrations of the stock market can be disconcerting. Therefore, one must recognise that a buy-and-hold style of management is not as effective in the aftermath of a financial crisis. The challenge is how to manage equity investments in such an environment.
We believe that a careful blend of active and passive investment techniques will be the most effective way of navigating through this environment on behalf of our clients.