Many think of money as wealth. We believe that in and of itself, money has no value except that it can be exchanged for goods having some utility in the sense that those goods can help produce further goods or services. Money itself is a good we can use to purchase real wealth such as a stream of income, precious metals or crude oil and anything in between. The most valuable form of wealth is the ownership of the capital of a venture with the capacity to generate further wealth. For example, stock ownership in a company that has the ability to increase the value of its equity via its sales and growth.

Many times, we will maintain a cash or cash equivalent in a portfolio that is larger than the norm. This approach allows us to take advantage of opportunities as they arise. We view the stewardship of wealth as marathon rather than a sprint, and therefore, we manage our client’s investments to enable them to finish the race strong.

Our investment philosophy is anchored on tested strategies that have proven themselves to be valuable and rewarding under the most difficult and challenging times. Our track record and publications are a testament to that. Our combined experience and expertise of several decades has taught us that a customized portfolio that is anchored on hard assets, realistic expectations, properly hedged and with global understanding grounded not on ephemeral bandwagons but rather on mechanisms of wealth creation, is the fundamental cornerstone of serving the needs of our clients.

Principles of Our Overall Philosophy & Practice

  • Preservation of capital and sufficient safety margin when deploying said capital.
  • Bias for portfolio holdings and assets that do not have counterparty risk.
  • Sustained income streams from asset classes that have intrinsic value. Consideration is given to free cash flow and debt coverage in addition to dividend yield.
  • Macroeconomic, sector, and company-specific fundamentals guide the core of portfolio holdings, while we are assessing the cyclical component of risk.
  • When uncertainty and high volatility prevail we employ hedging strategies in order to mitigate risk and preserve capital including the use of stop orders and option trades.
  • Exploit inefficiencies in the market using various options strategies to enhance portfolio return.
  • Once a target has been achieved, outright profit-taking, position reduction and/or stop loss measures may be employed to ensure that we lock in existing profit and protect against a possible period of consolidation.
  • A global perspective that analyzes market fundamentals while considering geopolitical dimensions.
  • The risk profile of the investor will guide the particular strategy utilized which will be rules-based.

Perspective on Investing

Our perspective on investing includes (among others) the following elements.

  • Identification of dormant assets that have intrinsic value
  • Asset classes whose value is below its historic 3-5 year average (cyclically adjusted) and whose business generates sufficient and growing earnings. Emphasis is placed on dividend growth history
  • Businesses that have a significant market share, enjoy some barriers to entry, and whose competitive advantage separates them from the crowd
  • Businesses that have profit margin power, sufficiently positive free cash flow, and pay a healthy dividend that is significantly above the 10-year Treasury note
  • Businesses whose management has exhibited strategic competencies demonstrated in growing sales, executed with professional ethical power
  • Historically strong balance sheets with major emphasis on prudent use of leverage
  • Exploiting ETFs of industries and sectors that hold the above principles and goals
  • Mr. Market – as Benjamin Graham would have said – offers opportunities based upon ephemeral trends and mood swings. Based on our principles and value position we evaluate market-entry and exit points in order to take advantage of those opportunities
  • If we believe that a particular asset class and/or a particular security has reached bubble territory and is unsustainable then we would not hesitate to short that particular asset class and/or security
  • A minimum amount of cash (or cash equivalents) is preserved for those opportunities
  • In times of uncertainty we utilize options strategies (covered calls, vertical spreads, etc.) that are intended to generate returns in accordance with the client’s mandate and risk profile

Learn Even More About Our Approach to Wealth Management