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Our Foundational Principles incorporate the use of a True Asset Allocation Approach. The second most important principle, sums up the advice of the world’s most successful investors in three powerful words: "Don't Lose Money."
Core Principles
Use a True Asset Allocation Approach
A good due diligence process is important in selecting investment strategies. Yet, even the best due diligence process in the world cannot predict the future. Hindsight has 20-20 vision, but peering into the future can often times produce a fuzzy and cloudy picture. Therefore, we must recognize and plan that that there will always be uncertainty.
For this purpose, we use an investment formula that won Dr. Harold Markowitz the Nobel Prize in finance in 1990. His approach demonstrates how you can maximize your profits and minimize your risk by properly asset allocating and rebalancing your portfolio. The publication of Dr Markowitz’s theories gave the terms “asset allocation” and “diversification” a great deal of attention. Unfortunately, much of Wall Street then used this idea to sell more securities to the public by using the terms “asset allocation” and “diversification” without really following Dr. Markowitz’s formula. The best application of asset allocation means spreading investments across truly different asset classes, not just across a few mutual funds or stocks and bonds. The weakness of such misapplication of the term "asset allocation" has made this crystal clear in the recent past; most Wall Street-traded investments lost money. Instead, had more people asset allocated across truly different asset classes including some that have no stock market correlation, they would have fared much better. Buying three or five stocks or mutual funds is not true asset class diversification. Asset allocation refers to spreading your investments among different asset classes, not just different securities or market sectors. Doing this has allowed us to survive and prosper during the longest bear market since The Great Depression.
We have had money invested in recent years in alternative investments not correlated to the stock market. While the stock market has gone down, these have gone up and produced steady dividend checks.
Instead we have had money invested in niche private real estate investments. They have also given us a positive return in a catastrophic environment. The same is true with our collateralized notes, equipment leasing, energy programs, precious metals, FDIC Insured Foreign Currency CD's and other high yield investments. Because different asset classes are imperfectly correlated – some zig, while others zag – our approach allows you to boost returns while reducing your portfolio’s volatility.
True Asset Allocation should be the foundation stone of your whole investment strategy. It’s critical to your long-term financial health.
