Philosophy

"Ethics and spiritual principles should be the basis of everything we do in life. All that we say, all that we think. Every activity should be based on that, including selection of investments. You wouldn't want to be the owner of a company that is producing harm for the public, and therefore, you wouldn't want to be the owner of a share of a company that is producing harm for the public. We should all give great attention to that, and probably it will be profitable to you, because companies that are harmful ordinarily do not prosper for very long." — Sir John Templeton

When managing your investments, our philosophy is to aim for the best returns for our clients— based on each client’s individual needs, risk tolerance, and objectives—while also seeking to make a positive impact in the world.

Unlike other financial planning companies, our specialized knowledge of BRI and relationships with managers who screen the companies in which they invest for certain social and moral issues provides an opportunity for clients to align their investment decisions to their faith and values while raising the social consciousness of what activities one's investment dollars are funding.

This level of investment screening is entirely possible within the primary aim of achieving adequate diversification and working toward each client's individual financial needs and objectives. 

Learn about Biblically Responsible Investing (BRI) 

Investing Wisdom

Investing is not an end in itself, but rather a means to help one pursue their most important goals. With that in mind, we take a disciplined approach to investment management and legacy planning and recognizing that investing is both an art and a science.

Investing as a Science      

Academic studies have shown that no person can time the financial markets accurately over long periods of time. Many "tactical" investment philosophies gained popularity on Wall Street over the past decade; however, in our opinion these are simply sophisticated terms for market timing. Market timing does not work because it requires guessing correctly twice: when to get out of the market and then when to get back in. In addition to being problematic due to market timing considerations, tactical methods may also involve more frequent buying and selling of assets and generate higher transaction cost.  Investors should consider the tax consequences of moving positions more frequently, which is another reason we avoid tactical methodologies in favor of long-term strategic asset allocation (which we discuss in more detail below).

"Traditional institutions and habits often tend to persist on Wall Street despite new conditions calling for a fresh point of view. With every wave of optimism or pessimism, we are ready to abandon history and time-tested principles, but we cling tenaciously to our prejudices." - Benjamin Graham

Modern Portfolio Theory & Strategic Allocation

Strategic asset allocation, backed by the Nobel Prize-winning principles of Modern Portfolio Theory (MPT), was the first approach to investing that moved away from predicting individual stock activity and moved toward analyzing the performance of an entire portfolio of various assets based on their potential risk and return. We have all heard the phrase – "don't put all your eggs in one basket." Empirical studies have shown that more than 90 percent of an investment portfolio's returns come from the asset allocation decision.¹ The key to asset allocation is to determine the correct baskets and how many “eggs” to put into each. MPT seeks to identify the optimum mix of assets across varying degrees of risk tolerance levels with the aim to maximize potential returns while lowering volatility and overall risk.

To be fair, MPT has its flaws (for example some economists argue MPT defines risk too narrowly as "market volatility") when there are many more factors that contribute to risk. There is no magic solution when it comes to investing, and asset allocation does not ensure a profit or protect against a loss.

While modern portfolio theory and strategic allocation sound complicated, MPT and strategic asset allocation are really just terms that support age-old biblical wisdom to remain diversified over the long-term. Perhaps we may learn something from advice written nearly 3000 years ago by King Solomon (1000 BC - 931 BC), whom many scholars consider one of the wealthiest persons in history:

We incorporate a variety of techniques seeking to develop the optimal investment strategy for each client, and MPT simply provides a starting point for pursuing a properly diversified portfolio.

¹Source: “Determinants of Portfolio Performance II: an Update,” Brinson, Singer, & Beebower, Financial Analysts Journal, May/June 1991.

No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not eliminate market risk.

Neuroeconomics & Behavioral Finance

It is human nature for emotions to override logic and cause someone to make snap decisions when it comes to investing. Academics have established a field of study around this phenomenon called Neuroeconomics, also known as Behavioral Finance. For example, when you touch your hand to a hot stove, instinct and fear tell you to move your hand away. Yet when it comes to stocks, this same reaction could have negative effects on your long-term strategy. 

Sir Isaac Newton, in reference to his own experience with investing, once exclaimed, "I can predict the motion of heavenly bodies, but not the madness of crowds".

To avoid the natural human tendency to want to sell low and buy high, we work closely with clients to build a disciplined, long-term approach that seeks to limit the risk of emotional intervention when markets are under duress.

Investing as an Art     

Building upon the science of investing, we recognize that investing is also an art. To be a successful investor in the stock market, you first must know who you are and what you stand for. An ancient Greek aphorism reads, "Know Thyself." We believe that knowing where you are going and maintaining a long-term perspective will help you to make wise choices. Ultimately, our goal is to help clients navigate challenging markets from a values-based perspective, in order to address their individual needs and objectives.