The framework
The research-backed foundations that shape how we manage every client account.
Capital markets have created immense wealth over time. Many investors would benefit by simply understanding this fact. Historically, investor activity and behavior has only detracted from these returns.
"So who still believes markets don't work? Apparently it is only the North Koreans, the Cubans and the active managers."
— Rex Sinquefield, Co-founder, Dimensional Fund Advisors
Past performance is no guarantee of future performance. Sadly, many investors ignore this fact and flood money into managers that have performed well in the past. Why play that game when you don't have to?
"Money flows into most funds after good performance, and goes out when bad performance follows."
— John Bogle, Founder, Vanguard Group
The world is not black and white, and investors can choose to combine the best of both active investing and passive management. Factor investing is a systematic approach acknowledging market prices and information without having to predict future outcomes.
"Everybody has some information. The function of the markets is to aggregate that information, evaluate it and get it incorporated into prices."
— Merton Miller, Ph.D., Nobel Laureate in Economics
Not all stocks are created equal; therefore, not all stocks should have the same expected return into the future. Academic research has uncovered additional company characteristics that have historically rewarded investors with additional returns.
"Markets are efficient, but there are different dimensions of risk and those lead to different dimensions of expected returns. That's what people should be concerned with in their investment decisions."
— Eugene Fama, Ph.D., Nobel Laureate in Economics
Investing in your home country has its benefits; however, ignoring the rest of the growing global economy often comes as a missed opportunity.
"Cultures, nations, religions, and people are not rocks. They are in constant transformation."
— Hans Rosling, Author of "Factfulness"
Not all investment accounts are taxed the same. Investors should pay attention to the what and where they allocate assets to minimize their tax bill and maximize their after-tax returns.
"I'm proud to pay taxes in the United States; the only thing is, I could be just as proud for half the money."
— Arthur Godfrey, American Radio & Television Entertainer
Investments are a tool used to achieve financial independence and specific goals. We work with our clients each year to map out an allocation among assets that meets their return target and risk tolerance.
"The most important thing about an investment plan is that you have one you can stick with."
— David Booth, Founder & Chairman, Dimensional Fund Advisors
Most investors are constantly reacting to markets and trying to figure out what is coming next. This is to relinquish control to the markets. Instead, build a financial plan and a portfolio allocation that can handle whatever the markets throw your way.
"The investor's chief problem, and even his worst enemy, is likely to be himself."
— Benjamin Graham, co-author, "Security Analysis"
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