Financial Philosophy
While it’s true that not everyone needs a written comprehensive financial plan, we believe that everyone benefits from the planning process. AFS operates with “the end in mind” - managing your financial capital as a means to achieving the goals that matter to you.
AFS has long experienced that which has been documented by independent research (see Dalbar Study in the AFS Financial Library): The vast majority of investors investing without advisors not only underperform the markets – but also underperform their own investments’ historical returns. Individual investors’ poor personal performance is attributed to their emotionally incited reflexes to ever present market noise.
At times, our most important job is simply preventing (irrelevant) media chatter from impacting our clients’ investment decisions, and undermining their financial plan. Your AFS Action Plan is centered on actions and strategies that truly impact your family’s long term wealth and those factors over which we have management and control.
Investment Philosophy
Over the last 81 years ending 2007, we know that the stock market (as measured by the S&P 500 index) was up 68% of the time, down 23% of the time, and flat 9% of the time.
Further, research shows that if you invested $10,000 in the stock market’s S&P index for the 20-year period from 1988 to 2007 your investment would have grown to $105,025; but if you tried to time the market by going to cash and missed the single month with the highest return each of those years, your investment would have grown to only $28,446 - representing an opportunity loss of $76,579!
With clarity and unwavering guidance we take a disciplined approach to focus on fundamentals of the companies and economies in which we invest. We reject media hype, short-term market timing strategies, momentum trading, charting, and trendy sector investing. We draw a clear distinction between lack of (reactive) portfolio trading and attentive holding of positions - when the latter is in your best interest.
• We bring to the table a macro-view, studying the markets, economic indicators, government data, corporate filings, and independent research
• We invest for total return (net sum of long term capital appreciation plus income) with attention to erosion effects from inflation, taxes, and transaction costs
• We recommend appropriate cash reserves for your immediate access to satisfy ongoing cash needs (thus avoiding the need to sell at market bottoms)
• We may construct separate portfolios to meet separate goals with time horizons of less than 3-5 years
• We proactively reblance porfolios, and harvest tax losses as we see the need
Our institutional-level investor status positions us to accommodate most any asset class, including stocks, bonds, ETF’s, real estate, and commodities. However, we advocate “stocks for the long run.1"
1 ”Stock for the Long Run” (book by Professor Jeremy J. Siegel, see Recommended Reading in the AFS Financial Library) |
