The investment process we utilize focuses on three main things:

  • The client’s needs
  • A top down analysis of the global macro-economic environment
  • And a bottom up look at individual investment opportunities

Although all of these items are discussed in detail in our newsletters, updates, and research reports, we wanted to take the time to highlight some key components of our investment process.  And this process ideally starts with a financial analysis of the needs, wants, and desires of each and every client.  This allows us to provide a custom tailored portfolio designed to meet our client’s goals and objectives, while putting in place an appropriate amount of risk controls.

Furthermore, in the top-down analysis, we look at a variety of global economic indicators in an effort to highlight and discover countries, regions, industries, and sectors that might be offering attractive investment opportunities.  We also combine this analysis with an understanding of Behavioral Finance principles to, not only, understand what the data says about certain industries and sectors, but also to get an idea of how market participants are reacting to that data.  We feel this is where the real opportunities are discovered.

Once we have identified those key areas, we use our bottom up tools in an attempt to find specific investments that look attractive on a risk/return basis.  The four main drives we focus on at the company level are: balance sheet strength, earnings power, free cash flow generation, and valuation.  To be frank, many people look for the first three items but overlook the valuation component.  Interestingly enough, we feel the valuation aspect of an investment is the most important part of the bottom up approach.

By using these tools, we find that we can take a lot of the emotion out of investing.  This helps us identify the signal that market is sending us by blocking out the noise that is inherent in the day to day market operations.  Over the years, this has proven useful to our efforts in managing portfolios for clients.  And we will strive to continue to provide quality asset management services to our clients in the coming years.