Strategies & Securities
Aggressive Growth & Growth - Primarily comprised of equities and Real Estate Investment Trusts, either individually or through mutually owned funds.
Balanced - Comprised of both equities and fixed income, either owned individually or through mutually owned funds.
Fixed Income - Primarily comprised of fixed rate of return securities such as bonds (corporate, tax free municipal or government), preferred stock, unit investment trusts, asset backed securities.
Equities - The screening process in selecting equities for portfolios must meet one of two criteria primarily; earnings growth with a rate superior to that of the overall market, or an attractive predictable yield when combined with a nominal growth rate exceeds the overall rate of market growth.
Equities are not limited to domestic issues. We take a global approach to include issues from countries which exhibit a healty GDP expansion or recovery.
Our methodology primarily revolves around a 'top down' approach, where a country's GDP is the first stop in determing expansion of demand for products and services, then by industry, and finally to seek out the leading securities within.
Ultimately the trend in earnings dictates the direction of a company's stock price, and so the beginning of each calendar quarter during 'earnings season' is paramount to seek out corporate reports and guidance going forward.
We ordinarily will focus on companies with a highly recognizable product or service and which is a leader in their field. Highly speculative issues, penny stocks, one time corporate event catalysts, are not within our crieteria for stock selection.
Fixed income- A clients tax rate is the first determination whether to focus on municipal tax free bonds issued by the state of their residence if beneficial, or to focus within the taxable domain.
Either way the yield curve and 'practical' interest rates are the most deciding factors in choosing maturies of debt. In a low interest rate environment, it is relatively unwise to 'lend long' or, in other words, to buy long dated maturities. When the yield curve shifts up, the prices of those bonds may suffer losses as they try to adjust to a new yield environment (bond prices move inverted to their yield). Conversely after a significant move higher in inflation, usually occuring over many years, and with a government having raised interest rates multiple times, it then is wise in our opinion to 'lend long' as those securities, then paying a high practical interest rate, will continue to do so for the long term. Eventually as an economy cools down and interest rates recede, then price appreciation of those issues most probably would rise as well.
Real Estate Investment Trusts- although they are equities, we treat real estate investment trusts 'reits' as an asset class of their own. There are unique characteristics of reits which, quite often, reduces a direct correlation with common equities. We only seek out the largest and most stable issues that show potential, generally with a minimum market capitalization of over $400 million, a diverse portfolio of directly owned properties, relatively low leverage and at times, pending the state of the markets, and an attractive dividend yield.
Markets are dynamic and fundamentals can change rapidly. Characteristics of securities chosen for accounts can deteriorate causing those securities to gain or lose value. It is best to discuss characteristics of securities and their possible fluctuations of principal during the initial consultation stage. Accounts may gain or lose value, are not FDIC insured nor are they bank guaranteed.