San Diego Investment Firm

INVESTMENT STRATEGY OVERVIEW

Our well-researched investment philosophy got its start at the UCLA Anderson School of Management. After years of refinement, we offer five investment strategies to our clients, ranging from Conservative to Aggressive.


Conservative

Moderately Conservative

Moderate

Moderately Aggressive

Aggressive

Conservative

The Conservative strategy attempts to earn stable returns with low levels of volatility over time while maintaining a focus on downside risk management.

Moderately Conservative

The Moderately Conservative strategy attempts to earn stable returns with low levels of volatility over time while accepting a small degree of risk and volatility to seek some degree of appreciation.

Moderate

The Moderate strategy seeks to achieve equity-like returns while exhibiting less volatility and maximum drawdown over full market cycles.

Moderately Aggressive

The Moderately Aggressive strategy seeks to achieve equity-like returns over full market cycles but with less risk.

Aggressive

The Aggressive strategy strives to aggressively take advantage of global capital market investment opportunities while exhibiting less volatility and maximum drawdown than conventional equity portfolios over full market cycles.

Our Guiding Principles

1 Risk Contribution

2 Innovation

3 Exchange Traded Funds (ETFs)

1Risk Contribution

To help keep clients from making the grave mistake of selling during periods of high volatility, we created the Risk Contribution Method. This methodology helps remove the natural human instinct of buying high and selling low (where we should be buying low and holding on for the long-term). It will instead underweight asset classes of high risk and overweight those of low risk.

While the sub-asset class levels (e.g. U.S. large-cap stocks) are largely efficient, the major asset classes are not. It is common for stocks to be at risk when an economic slowdown is imminent, whether that be a growth rate slowdown or an economic expansion. Sometimes, but not always, this coincides with periods of investor euphoria. In short, when stocks have had a good run and they are at their riskiest, we simply take some money “off the table.”

Bull Oak economic and leading indicators. Graph that shows that specific leading indices can provide enough lead time to adjust portfolios accordingly.

It is also common for stocks to be underpriced during periods of investor panic and economic contraction. After a stock market crash, we are able to take advantage of cheaper equity prices and buy at discount prices.

The Risk Contribution Method identifies these periods by carefully evaluating reliable forward-looking indicators. We then underweight those risk assets and overweight others to take advantage of these misaligned prices.

2Innovation

We seek to invest in companies that have the potential to change the world. We believe that innovation is the main driver for economic growth. As such, disruptive innovative companies tend to increase efficiency and will eventually take market share from their competitors.

Innovation pushing economic growth forward is one of the most consistent macroeconomics findings, and it’s been true for centuries. America’s genius for innovation and entrepreneurial drive is well known—with our openness and enthusiasm for practical innovation from the steam engine to the search engine—to be the primary reason for America’s economic preeminence. Economists have calculated that approximately 50% of U.S. annual GDP growth is attributed to increases in innovation.

Participating in this growth is essential for those seeking to capitalize on these disruptive technologies.

3Exchange Traded Funds (ETFs)

We invest exclusively in ETFs (exchange traded funds). An ETF is a basket of securities, usually stocks or bonds, that trade on an exchange and typically track an underlying index. They are similar to mutual funds, though ETFs offer three major advantages:

  1. ETFs trade throughout the trading day where a mutual only trades once after the market is closed. This allows us to provide more liquidity to our clients
  2. ETFs are more tax-advantaged versus mutual funds. Due to structural differences, ETFs typically incur less capital gains to their shareholders. Additionally, capital gains tax on an ETF is incurred only upon the sale of the ETF by the investor, whereas mutual funds pass on capital gains taxes to investors through the life of the investment.
  3. Most ETFs have extremely low expense costs versus other investment vehicles. While these fees are built into the structure of the fund themselves, they are costs nonetheless. As a fiduciary advisory firm, we do not receive commissions or kickbacks from fund companies. Therefore, our incentive is to keep unnecessary costs from burdening your investment portfolio. ETFs help us do this effectively.

TECHNOLOGY

You will have 24/7 access to your accounts that includes balances, positions, asset allocation, performance, statements, tax forms, RMD amounts, and others. In addition, you will also be able to track your overall net worth in real-time, a critical piece when evaluating your long-term financial goals.

WHERE YOUR MONEY IS HELD

All of our client’s assets are held at TD Ameritrade via brokerage accounts (IRA, Roth IRA, Trust, Jt Ten, etc.). We do not directly custody our client’s assets. Your account(s) is held at a large, well-known advisory firm where you will have 24/7 access to your account.

OUR FEES

Our fee schedule is designed to be fair and transparent. As a fiduciary advisor, we do not receive commissions, kickbacks, or other forms of outside compensation. Our fee schedule ranges between 1.69% to 0.39%, depending on the account size we manage.

All of our services are included in this schedule as we do not have any other fees. In fact, there is no charge for the initial financial plan nor the continuous financial planning services you would receive as a client. You can view our ADV 2A brochure to view the full schedule, or you can also contact us to learn more.