How do we begin building the right portfolio for each of our clients? It all starts with assessing an individual’s willingness and ability to take risk. While our goal is to create a portfolio that will meet clients’ long-term financial goals, we must do so with their comfortability within targeted risk tolerance. Because, ultimately, we recognize an allocation in any portfolio is only as good as a client’s fortitude to stay invested through market ups and downs.

Our investment team employs a blend of different market strategies including strategic and tactical allocation, top-down and bottom-up analysis, fundamental and technical analysis, and the use of active and passive investment vehicles. Why is this important? Because each of these vehicles serves a specific purpose in creating an efficient portfolio. Strategic asset allocation is the long-term makeup of a portfolio or core holdings. Whether the market is in an uptrend or down trend, the intent is to continue to retain these holdings to achieve your long-term goals. Where tactical analysis comes in is in navigating the shorter-term market trends that emerge as a result of a change in the economic environment or an event-driven shock. Our aim is to reduce risk exposure when markets become overheated and add risk back when asset levels are discounted. Using this overall strategy has served our clients well in years past, including our allocation changes made prior to the 2020 recession.

We learned early on that even if you invest in a great company, if it’s in a sector or industry that is out of favor, that individual stock will likely decline along with the entire industry. That’s why our team utilizes a top-down analysis to create our tactical allocation—looking at the broad investment landscape starting with asset classes, geographic demographics, market cap size, and specific sectors and industries. From there, we utilize bottom-up analysis to find solid underlying companies with promising growth potential, strong management teams, and overall improving fundamentals. Beyond that, technical analysis provides a picture as to whether it’s a good time to buy or sell those individual stocks or indexes. Price and volume patterns also help tell a story and studying them assists us in determining whether a holding will stay in the same trading pattern or emerge into a new one.

Why do we make use of both active and passive investment vehicles? Many asset classes are very efficient—meaning the prices reflect where they should be trading. Including these passive vehicles in your portfolio allow us to save you costs while achieving similar return to their counterparts. Other areas of the market, such as small caps and emerging markets, are less efficient. In these areas, active financial managers have a better chance of achieving alpha than a large cap equity fund, for example. Our firm utilizes individual stocks to provide that active management at a lower cost and are better able to control the tax realization.

There will be both up years and down years in the market. We will work diligently every day to make sure your portfolio is well positioned for the current environment. Our goal is to reduce the downside risk while participating in the upside. This strategy makes the ride much smoother while achieving a similar outcome. Remember, investing is for the long term. And although there may be bumps along the way, our ultimate mission is to help you reach your long-term financial goals.