The firm’s investment philosophy is based on the concept of asset allocation. Depending on your goals, risk tolerance and account size we may utilize traditional asset classes such as domestic and international equities and/or equity funds to bonds and/or bond funds with different maturities, credit risk and geographical exposures. In addition if appropriate other asset classes such as REITS, precious metals and managed future funds may be utilized .

We do believe that at times when facing unusual valuations or imbalances in a particular asset class it is more prudent to make a major change in the overall exposure to an asset class as opposed to maintaining the status quo exposure because of a pre determined asset allocation.

This is in contrast to traditional ‘strategic asset allocation’ method that tend to have a constant exposure in for example 60% equities and 40% bonds often referred to as 60/40 or other very similar allocations such as 70/30 or 80/20.

The goal of such strategic asset allocation models is to create what is widely referred to as an ‘optimized’ allocation of equities, bonds, and maybe some cash and have those allocation remain constant during all times. However periods like 2008 financial crisis and past equity bear markets have shown that strategic asset allocation models are not able to offset sharp downturns in equity markets.

Obvious reason for this is because these models are overexposed to equities but another reason is because of various factors in financial markets there is now a high correlation between even non-equity assets and equities.

So at the very least each quarter but never daily or weekly using various economic, fundamentals, or technical indicators we will look at the risk and rewards in various asset classes and may significantly increase allocations into asset classes that are expected to outperform or reduce exposure to those that are expected to underperform.

The goal is to not only reduce the portfolio’s overall risk exposure but to lessen the chance of losing money and increase the chance of achieving returns that will help you reach your goals.