Our Investment Philosophy


“In the short run, the market is a voting machine, but in the long run it is a weighing machine.” – Benjamin Graham

There is a science to investing. We apply it.

It incorporates a body of knowledge generally referred to as Modern Portfolio Theory or MPT. Its history is traced to 1955 with Harry Markowitz’s PhD thesis for the University of Chicago and is reflected in his classic book “Portfolio Selection.” The work was later recognized by Markowitz’s Nobel Prize in Economics awarded for his groundbreaking insights. Since then, others have expanded on his original theory including William Sharpe (another Nobel winner), Eugene Fama, and Merton Miller. While markets do not allow for perfect predictions or control, a great deal has been learned about how to minimize risk and capture returns without the illusion of control. When this knowledge is applied it becomes a discipline.

There is an art to investing. We perform it.

Behavioral Finance helps ground this side of our discipline. It helps us focus on client engagement in a long term strategy that is personally compelling to the point that they will stick with it when it counts most. We believe that markets work, so we’re happy to accept their long term rewards without trying to “outdo” them. Over time markets do an excellent job of rewarding long term participants. There’s a collective wisdom that emerges from the buying and selling activities of all the market’s participants that no single individual is likely to improve upon. The art is in aligning personal financial objectives with disciplined investing behavior (buying and selling) for individuals so as to capture the returns and minimize the risks of those individuals without pretending to predict anything – except the continued survival of capital markets. There is an art to investing.

There are reliable drivers of risk and return. We harness them.

There are ways to add value to the investing process without trying to pick ‘winners’. There are unique sources of risk and return that can be identified and harnessed through the use of appropriate instruments. There are disciplined approaches to re-balancing and cost control that can add value as well. We use these instruments with rigorous research and experience. Unfortunately, most of what we read, see, and hear that passes for investment activity has nothing to do with investing. It has everything to do with trading and is not based on any accepted science.

We refer to this as “noise” and it fills popular financial media. This stems from and feeds back into the natural human desire to “beat the system,” which we call “greed” and to avoid the pain of short term risk which we call “fear”. Wall Street and many so called ‘advisors’ trade on these impulses and offer investment tactics and gimmicks that are long on hope and short on science. Our approach actually recognizes these dynamics as reliable drivers of risk and return within a policy that is scientifically grounded and rigorously applied. We do this through hands-on portfolio design and management. If we don’t believe a particular vehicle adds value, we won’t offer or accommodate it. When we make recommendations it’s because we believe there’s a sound theoretical and practical foundation for success.

There are no shortcuts to success.

Investment advisory services are not a ‘fast food’ proposition. (See Lou the Butcher) Success with an investment program takes time and commitment to a sustained and evolving professional relationship. We make that commitment and enjoy the benefits of a shared partnership of results with our clients.

We use the tools of our profession with our own rigorous research and a wealth of experience. Ultimately, successful investing is achieved by knowing why you want to invest, accepting that there are no shortcuts, and engaging in a long-term, disciplined process that is guided by empirically validated knowledge. This is our definition of “grounded wisdom” and this is what we offer.