Investment Philosophy & Process
Our investment philosophy balances the higher return potential available in stocks with the relative safety available in cash and fixed income investments. Our stock selection strategy is based upon selecting stocks with above average growth prospects selling at reasonable prices. Our fixed income strategy is based upon ensuring safety of principal while pursuing the best available yield.
In the selection of individual securities for a client's portfolio, primary emphasis is placed upon liquidity, quality and growth. We invest solely in U.S. traded securities.
Stocks
Stocks selected must have the potential for above average total return over a one to two year time horizon. Total return is comprised of capital change plus income. Liquidity and quality are stressed here as well, with quality being measured by analyzing financial strength, growth and stability of profits, and management competence. Once a stock achieves its potential return, at least a portion is sold. Such a technique, known as scale selling, reduces risk in the portfolio. On the downside we do not add to a losing position. Instead, when investment mistakes are made the entire position is sold.
Cash & Fixed Income
For cash and equivalents, we use money market funds and U.S.
Treasury Bills. When investing in the fixed income market, U.S. Treasury
Notes and Bonds and, if appropriate, investment-grade municipals are acquired.
Rarely, we will purchase Federal Agency or high quality corporate bonds.
Our approach is to ladder maturities out as far as ten years.