3. Our academic approach to wealth management.
As a wealth management firm, it is our goal to provide guidance and expertise and discourage “emotional investing.” Following our extensive initial consultation process regarding our clients’ accounts, we use the following basic guiding principles of investing to establish an “efficient portfolio”:
Capital markets are not always right and prices are not always right, but markets are so competitive that it is unlikely an investor can systematically profit from mistakes in the market at the expense of others.
Active management generally fails.
There have been a limited number of active managers that outperform the market, but no more than you would expect by chance, and it is difficult to identify them in advance.
Market timing is risky.
A successful market timing strategy requires three correct decisions: when to get in, when to get out, and when to get back in. The success rate required to beat a buy-and-hold strategy is unattainable for most investors.
Risk and return are related.
Diversification is key.
Bring discipline to the process.
Capital markets are noisy. Investors must maintain their discipline and adhere to a long-term investment strategy in order to have a successful investment experience that captures capital market rates of return.