Harnessing The Unlimited Power Of Free Markets To Help Investors Move From A State of Scarcity To A Position Of Abundance, One Client At A Time.

In 1962, Dr. Eugene Fama from the Chicago School of Economics developed the "Efficient Market Theory". His studies concluded that the markets are random in the sense that all knowable and predictable information is rapidly digested and reflected in current market prices. Only unknowable and unpredictable new information will cause market prices to move.

Therefore any attempt to time the market by changing or altering the mix of assets in a portfolio based on a prediction or forecast about the future is an activity of chance and random luck at best.

This may seem simplistic, but since that time academic study has built upon these principles and amassed sizable economic evidence to show that the major capital markets are highly efficient, in the sense that available information is rapidly digested and reflected in market prices.

We Believe That Free Markets Work!

We utilize the principles of Free Market Portfolio theory to help our clients benefit from broadly diversified, global based portfolios that are designed to achieve market rates of return with reduced risk to principal.

This investment philosophy is based on the Nobel Prize winning theories of Harry Markowitz, Merton Miller, William Sharpe and others. The research of these astute academics suggests that investment returns are primarily determined by asset allocation rather than by market timing or individual stock picking.

Therefore, we invest in passive portfolios with the objective of getting market (or asset class) returns.

The term "passive" (as in investing) might suggest an apathetic, docile, non-proactive approach to some people. Actually it is just the opposite. Passive investing is a very rigorous and disciplined strategy grounded in exhaustive academic research of asset class risks, returns and diversification.

This philosophy makes no attempt to distinguish attractive from unattractive securities, or forecast securities prices, or time markets and market sectors. Instead, passive managers invest in broad sectors of the market, called asset classes or indexes, and, like active investors, want to make a profit, but accept the average returns various asset classes produce.

Passive investors make little or no use of the information active investors seek out. Instead, they allocate assets based on empirical research delineating probable asset class risks and returns, diversify widely within and across asset classes, and maintain allocations long-term through periodic rebalancing of asset classes.

Portfolios Engineered With Low Cost & Continuous Monitoring

Accordingly, we use low cost, no-load exchange-traded funds or "ETFs" to develop globally diversified investment portfolios that seek to control the elements of risk in a portfolio, then manage those portfolios with a system of minute-by-minute monitoring.

This disciplined, fully automated system means transaction costs are minimized and your portfolio risk is managed daily.

These portfolios range in risk from conservative to aggressive and are specifically designed to meet the unique needs of each client. Although we fully endorse the passive investment strategy, please remember that no investment strategy (including asset allocation and diversification strategies) can absolutely ensure peace of mind, assure profit, or protect against loss.

Why Do The Vast Majority of Active Money Managers Fail to Beat Their Benchmark Index?

Empirical research supporting the theory of efficient markets reveals that active investment management professionals (who do not believe the markets are efficient) have rarely been able to identify under priced securities and achieve superior returns with any regularity.

In fact, there is strong evidence that the application of expertise and diligence in efforts to "beat the market" ordinarily promises little or no payoff or even a loss of principal after taking into account research and transaction costs.

Those who are skeptics should visit www.standardandpoors.com  If you do, you can download their regular SPIVA report, otherwise known as the Standard & Poor's Indices Versus Active funds scorecard. The most recent quarterly report shows that over the trailing five year period 71% of large-cap funds failed to beat their benchmark.

Even worse, the fail rate was 79.7% for mid-cap funds, 77.5% for small-cap funds, 78.2% for international funds, 86.7% for emerging market funds, 89.8% for long government bond funds and 85.7% for mortgage-backed securities funds.

These percentages will change over time and from quarter to quarter, but the pattern over the long haul is consistent....active managed funds fail to beat passive indexes.

The Significantly Higher Costs Produced By Active Money Management Often Cause Portfolio Returns To Suffer

Active management might best be described as an attempt to apply human intelligence to find "good deals" in the financial markets. Active managers try to pick attractive stocks, bonds, mutual funds and time when to move into or out of markets or market sectors based upon a forecast or prediction of the future. Many managers place leveraged bets on the future direction of securities and markets with options, futures, and other derivatives. They believe the market is inefficient and that inefficiencies can be identified and exploited in advance.

The problem is that statistically this approach simply does not hold up. When looking back over the past decade, their will always be a certain small percentage of active managers that do beat the market. But considering the tens of thousands of managers trying to beat the market over time, it can be easily argued that this performance is no more than could be expected from the laws of chance (or random luck). And even in the cases that do occur, there is no way to identify these individuals in advance in order to profit from it.

Studies have shown that there is zero correlation between a managers past performance and his ability to repeat it again in the future.

This active trading style often leads to higher taxes, higher costs, more risk in your portfolio than you thought and in some instances outright gambling with your financial future. If you bet your future on picking fund managers, you are playing the loser's game.

For your continuing education, we have provided a number of very insightful interviews with many of the academics discussed in this section. Just click on the "MEDIA" tab located on the left side of this page and you can access the video immediately.

If you would like to meet either in person or by telephone, or simply would like to receive my FREE 35 page "Investor Awareness Guide", please use the CONTACT US link and let me know.

I look forward to meeting you!