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Frequently Asked Questions

What is our investment philosophy?

Our investment philosophy is based on numerous academic scholars, independent research studies, and Nobel Prize Laureates.  It consists of utilizing scientific formulas and owning broad asset classes globally diversified.  Our asset class portfolios provide equity positions in more than 14,000 companies in 39 countries around the world.  Additionally our portfolios are rebalanced regularly, selling off the winners (selling at the high), and buying the losers (buying at the low).  We educate investors about how markets work.  We assist investors in determining their emotional risk tolerance, design an appropriate investment portfolio, and provide the life-long coaching and education to enable them to reduce stress and anxiety and achieve greater peace of mind about their family’s financial future.

Who are these academic scholars, independent research studies and Nobel Prize Laureates?

Dr. Harry Markowitz is an influential economist at the Rady School of Management at the University of California, San Diego. He is best known for his pioneering work in Modern Portfolio Theory, studying the effects of asset risk, correlation and diversification on expected investment portfolio returns.  Dr. Harry Markowitz won the Nobel Prize in Economics in 1990 for his work in 1952 at the University of Chicago, it took almost 40 years for computer technology to become available to validate his scientific formula’s.    According to Investorpedia.com “Markowitz's theories emphasized the importance of portfolios, risk, the correlations between securities and diversification. His work changed the way that people invested.  Prior to Markowitz's theories, emphasis was placed on picking single high-yield stocks without any regard to their effects on portfolios as a whole. Markowitz's portfolio theory would be a large stepping stone towards the creation of the capital asset pricing model.”  The “Markowitz Efficient Frontier” provides the highest rate of return for any given level of risk.

Dr. Eugene Fama and Dr. Kenneth French developed the Three Factor Model which expands on the capital asset pricing model (CAPM) by adding size and value factors in addition to the market risk factor in CAPM.  This model considers the fact that value and small cap stocks outperform markets on a regular basis.

Dalbar, Inc., an independent research organization, conducted a study entitled “Quantitative Analysis of Investor Behavior”.  The 2008 Study stated “For years, mutual fund companies have been marketing their products using the long-term results of a lump-sum investment. The results typically show that the funds' annualized returns have outpaced their designated benchmarks and inflation, implying that if investors purchase fund shares and hold them for similar time periods, they may achieve similar results.  Reality, however, is quite different from this scenario – and it's not the fault of the fund companies. In this year's Quantitative Analysis of Investor Behavior, DALBAR illustrates how investors are often their own worst enemies. By examining actual fund inflows and outflows during the 20-year period ended December 31, 2007, the analysis finds that investors often buy and sell at the worst possible times – and achieve commensurate returns.”

What are “Asset Classes”?

Asset classes are a group of securities that exhibit similar characteristics and behave similarly in the marketplace.  The two main asset classes are equities (stocks) and fixed-income (cash and bonds).  Equities are further separated by size (Large or Small), performance (growth or value), and geographic location (U.S. or International).  One of the most commonly recognized equity asset classes is U.S. Large Cap which consists of the 500 largest companies, based on market capitalization, in the United States, also referred to as the “Fortune 500” or “S&P 500”.

Why are asset allocation and diversification important?

Proper asset allocation begins by asking the right questions to determine each investors unique risk tolerance.  Numerous independent studies of portfolio performance have determined asset allocation accounts for more than 90% of investment returns.   More than 90% of your investment return is determined by your asset allocation alone...stock picking and market timing combined were responsible for less than 6%!  Therefore you needn’t worry about what specific equities to buy or when to buy them, but you should focus on owning the correct asset allocation globally diversified.  A properly allocated investment portfolio will provide the highest level of return for any given level of risk.

An investor needs to be diversified because you can’t reliably and predictably determine…in advance…which asset classes will over or under perform the market.  True diversification is not forecasting or adjusting a portfolio because we think we see a trend.  True asset class globally diversified portfolios are based on Nobel Prize winning investment allocations designed to reduce market risk and volatility.  Additionally all our investment portfolios are rebalanced regularly.  Rebalancing is a process of adjusting the asset class allocation to its original percentages.  Regular rebalancing  assures selling those asset classes which have performed well…virtually selling at the HIGH…and buying those asset classes which have performed poorly…virtually buying at the LOW.  Isn’t that the first rule of investing?  Buy LOW and Sell HIGH!

Why is Risk Tolerance important?

Essentially, risk tolerance is an individual’s ability to emotionally withstand an investments decline without reacting in panic.  Unfortunately, as simple as this sounds, most investors have never truly determined their tolerance for risk and therefore their portfolio level of risk is not properly aligned with their emotional tolerance for risk.  Tragically this ultimately results in unnecessary stress, anxiety and, worst of all, panic trading during temporary market declines locking in permanent investment losses.

What is the difference between “Traditional Mutual Funds” and “True Asset Class Diversified Mutual Funds”?

Most mutual funds are actively managed, they have a high-priced fund manager with an extensive research and support staff all paid for by the fund.  The fund managers continued employment, and their multi-million salary and bonus, is based on his/her performing better than their bench mark index and their competing funds.  In an effort to enhance the funds performance the manager regularly buys and sells stocks, sometimes he wins sometimes he loses, but every time the fund pays fee’s and commissions to the big brokerage firms who he/she works for.  All of these administrative and trading costs reduce the funds returns.

A true asset class based passively managed mutual fund has no need for an actively trading fund manager and administrative staff.  By definition the fund does not attempt to pick which stock(s) will perform better, or when to buy or sell them, they buy and hold all stocks which comprise the funds asset class, resulting in lower expenses.  Most true asset class funds are limited to institutional investors and/or require large account minimums.  

Why aren’t all investment advisors using this academic, scientific, Nobel Prize winning approach?

Most investment advisors receive commissions based on selling stocks, bonds and mutual funds, most of which are, promoted by the large brokerage firms.  The large brokerage companies make money by charging fee’s and commissions on every transaction, therefore they encourage and promote buying and selling.  The academic approach is based on buying and holding (Passive Management) properly diversified broad asset classes, not (Active Management) hyper-active buying and selling.  Simply stated the big brokerage firms can’t make money if you don’t buy and sell.     

Will we have on-line access to our accounts?

We only use large well recognized discount brokerage firms as custodians for your investments like Ameritrade, Charles Schwab and U.S. Bank all of which have on-line access. Additionally you will also have access through our dedicated web site. 

How do I get started?

Please review all the information on this web site.  We have provided extensive information concerning the unique investment concepts we utilize to reduce risk and volatility in the short-term and meet your long-term financial goals.

Contact our office for a No Charge/No Obligation initial consultation at (800) 449-6976 or (989) 269-9231 or via e-mail.  Please have available/provide the following information:

  • Answers to Risk Tolerance Questions.
  • All Current Investment Brokerage Statements.

We will have an Investment Advisor review your current investment portfolio, financial goals, assess your risk tolerance, and design a personalized and appropriate investment portfolio to meet your long-term financial objectives.

Contact our office today…We have a better way!


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