Stocks - Our equity investment philosophy has three components:

No artificial boundaries to our research universe

Many managers confine themselves to a specific stock selection methodology, such as “value” or “GARP” (growth at a reasonable price), or to a limited sector of the equity universe, such as large or small cap.

We believe that we can generate better returns by selecting the most promising stocks in each market segment, and so we look as broadly as possible.

Rigorous price discipline

Other managers use measures such as PE ratio, PEG ratio, return on equity, price to book value, etc. We go a step further and rank our universe of stocks using a proprietary methodology to estimate the percentage return that will be generated by earnings and forward valuations. We believe that this specificity leads to a greater degree of price discipline for both growth and value stocks.

Systematic risk controls

We know we cannot always be right, and we strive to limit losses. We believe that our use of stop-loss orders was key to outperforming the market during the bear market of 2000-02. In addition to selling when price objectives are reached, we will also sell using volatility-adjusted stop orders to protect unrealized profits or to limit losses.

Bonds - In our balanced and fixed income accounts, we build portfolios of bonds that are safe in terms of credit, sound in terms of structure, maximal in terms of yield given the first two criteria. Bonds are not meant to be a tool for speculation. They should reduce overall portfolio volatility and provide higher income than either stocks or cash.