Philosophy

How should I invest my money?

Our investment philosophy is academically based rather than driven by manager whims and prescient thoughts about future unknowns. Numerous studies have shown that active management simply doesn’t work. The data shows that investors/managers cannot consistently beat the market over longer periods of time. To try to do so is equivalent to gambling. We do not believe in gambling with other people’s money.

Capitalism and free markets work and those markets are efficient. Investors should concern themselves more with extracting those market returns rather than trying to beat them.

Our portfolios are constructed using a five factor model which incorporates the Three Factor Model developed by Eugene Fama and Kenneth French. Their work is an extension of the Capital Asset Pricing Model (CAPM), which was the groundbreaking work of William Sharpe that earned him the 1990 Nobel Prize in economics.

Portfolio performance is determined by:

The amount of stocks you own vs. bonds and cash

The types of stocks and bonds you own

The costs, including taxes, incurred to own your portfolio