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Evidence-based investing

Using research and data to make better decisions.

A Logical Approach to Investing

Our approach to investing is built on: The resulting process avoids stock picking, market timing, and forecasting, efforts which have been shown to detract from returns. However, it delivers measurable economic and intangible benefits that help our clients pursue their goals with confidence (much to the chagrin of Wall Street and the government, who collect fewer fees and taxes, respectively, as a result).

Our Key Principles

Extensive research shows that investors are best served by focusing on what they can control. Thus, the foundation of every successful investment portfolio rests on decisions about asset allocation, exposures to risk, cost, taxes, and disciplined management.

Forecasting interest rates, GDP growth, and corporate earnings all make for attention-grabbing headlines. However, there is little evidence that these efforts help you build a better investment portfolio.

Instead we create a unique plan for risk management that takes into account your ability, willingness, and need to take risk. Our investment approach also eliminates or minimizes risks that have historically gone unrewarded.

In the world of investing, there are always tradeoffs. The most common is that between risk and return. However, because a portfolio of assets is not simply the sum of its parts, diversification provides a unique opportunity to reduce risk while maintaining, or even improving, returns.

Our approach focuses on two key areas of diversification: risk factor diversification and international diversification.

Detractors of index investing consistently claim that those who follow this path are settling for “average” returns. Unfortunately, nothing could be further from the truth, as the majority of money managers consistently fail to beat (or even meet) their benchmarks.

The end result is that the so-called “average” returns of an index fund actually outperform between 60-95% of comparable mutual funds.

The primary reason that most money managers underperform is due to the high costs associated with attempts to beat the market. Even worse, a typical active management strategy incurs taxes that reduce returns by an additional 1% to 3% a year.

The combined drag can reduce the total return potential of a portfolio by up to 40% (or more).

It’s one thing to build a great investment portfolio. It’s something entirely different to manage it through market volatility, economic uncertainty, and significant declines in portfolio value.

True investing success requires a disciplined, rules-based management process that employs real-time monitoring, proactive rebalancing, and tax-loss harvesting.