Investment Philosophy

Our investment philosophy is based on these key concepts:

  • Focus on the things within your control.
  • Take only those risks that come with expected return.
  • Understand what you are investing in, and choose an asset allocation that is right for your goals and risk appetite.
  • Diversify your investment broadly.
  • Keep an eye on mutual fund costs and taxes; they make a bigger difference than many people realize.
  • Stay disciplined; change your investments only when your circumstances or needs change.


To support these goals, we employ a long-term approach to investing using a diversified portfolio of low-cost, asset class-specific funds that are tilted toward small and value stocks. We use bond funds to buffer the volatility in each portfolio, and the specific allocation to bonds depends on each client’s goals and risk tolerance. Our philosophy is based on Modern Portfolio Theory (MPT) and the belief that the markets are efficient.


  • Efficient Markets
    We believe that the stock market is efficient, and we feel it is very hard to outperform the market by picking individual stocks. To implement this strategy we use institutional funds that target a specific asset class or asset classes. These funds are low in relative cost and low in turnover. Low turnover funds usually have lower capital gains and better performance over the long run. The power of the markets video explains how security prices are set and how they change based on the collective knowledge of buyers and sellers. Armed with this information, investors will better understand how and why markets work.
  • Funds 
    We use passively managed institutional funds that invest in securities that represent the characteristics of certain asset classes, such as large cap or small cap stocks. These passively managed funds use a consistent strategy for the securities in which they invest. This is important because some actively managed funds are not always consistent with their investment style. Actively managed funds sometimes chase hot asset classes, sectors, or stocks, and this can undermine the portfolio asset allocation. Institutional mutual funds typically have much lower expense ratios than the average mutual fund, and these funds are available to clients of financial advisors and in other institutional accounts such as 401(k), etc.
  • Diversification
    We strongly believe in global diversification. Diversification with domestic and international stock and bond funds helps to reduce overall portfolio volatility.
  • Small Stocks vs. Large Stocks
    Historically, small companies tend to outperform large companies because they are riskier. We implement this strategy by using asset class-specific funds or core funds in both the domestic and international portions of a portfolio.
  • Value vs. Growth Stocks
    Historically, value stocks tend to outperform growth stocks because they are riskier. We implement this belief by tilting toward value stocks by using asset class-specific funds or core funds in both the domestic and international portions of a portfolio.
  • Market Timing
    We do not believe in market timing. Our definition of market timing is selling all positions and going to cash, then at some later time repurchasing these positions. In general, we feel this process is destructive to a long-term investment plan.
  • Bonds
    We believe the bond market is efficient and that longer maturities are typically not worth the risk. We usually stay short term with our bond funds, and we diversify globally.

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