Portfolios will be invested for the long-term in high quality companies that are leaders in their respective fields. We will seek to purchase securities at fair prices and will manage all accounts with a view towards maximizing after-tax returns over time, with your best interests in mind.
Diversification: Portfolios will generally be diversified across a variety of industry sectors having attractive long-term growth characteristics. Usually, the account will hold a minimum of 20-25 securities so that overall portfolio risk is minimized. Each position should be meaningful in size so that periods of individual company out-performance have a measurable impact on the overall performance of the portfolio.
Time Horizon: We believe that a five-year time horizon is reasonable for measuring investment performance for the following reasons:
• Tax deferred compounding is a critical component in maximizing after-tax returns over time. Excessive trading tends to lower long-term after tax returns due to an excessive taking of short-term gains.
• The probabilities of investment success are clearly superior when the investor has a five-year time horizon. Prices do not generally increase in line with real earnings growth rates in a consistent fashion due to the influence of the business cycle. However, over longer periods of time, stocks tend to track the ongoing earnings progress in a highly efficient manner.
Performance: All portfolios managed on a discretionary basis will be measured for total return performance over time. Longer-term results are paramount in evaluating our progress relative to the market.
Benchmark: The S&P 500 Index is the appropriate equity benchmark for our fully managed portfolios.
Asset Allocation: While recognizing the achievement of suitable returns is dependent upon the proper allocation of assets, we will always defer to the client’s specific investment needs and customize portfolios as necessary to achieve their individual goals.
Mutual Funds: Managers will utilize mutual funds when there is a need for specialty representation within the portfolio. Examples include technology funds, international funds and specialty funds such as biotechnology, natural resources, convertible securities, socially responsible investment needs, etc.
