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 Portfolio image

Conservative

San Diego Investment Firm

Moderately Conservative

San Diego Investment Firm

Moderate

Moderately Aggressive Portfolio image

Moderately Aggressive

San Diego Investment Firm

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 Behavioral Economics

3 Exchange Traded Products (ETPs)

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.

2Behavioral Economics

It is well known that any investor can act irrationally, selling during panics like the Great Depression or buying during periods of euphoria, like the Dot-Com Boom. Selling and buying based on fear or greed violate one of the fundamental rules of investing: don’t allow your emotions to drive your investment decisions.

We strive to instill positive behavioral heuristics within our clients. The goal is to stay invested during the long-term, whether the market is bullish or bearish. We aim to be as transparent and communicative as possible with our clients, which we believe produces success.

3Exchange Traded Products (ETPs)

We invest exclusively in ETPs (exchange-traded products), which include ETFs (exchange-traded funds). An ETP 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 ETPs offer three major advantages:

  1. ETPs 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. ETPs are more tax-advantaged versus mutual funds. Due to structural differences, ETPs typically incur less capital gains to their shareholders. Additionally, capital gains tax on an ETP is incurred only upon the sale of the ETP by the investor, whereas mutual funds pass on capital gains taxes to investors through the life of the investment
  3. Most ETPs 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. ETPs 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.

Ameritrade

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. 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.