Academic research suggests that asset class selection is the prime determinant of overall investment behavior.  We therefore pursue an asset class-based investment strategy with exposure to high quality US and foreign bonds and domestic and international companies of various sizes.  We maximize diversification by “owning the market” via no-load mutual funds and pursue a “passive” investment strategy that avoids making any market timing or individual stock bets.  Owning no-load passive mutual funds also minimizes costs and maximizes tax efficiency given their low turnover. 

We strongly believe in market efficiency and that it is not possible to consistently outperform over time by trying to time the market or attempting to pick individual winning securities, an approach known as “active management”.  While it may be true that pricing inefficiencies exist at any given moment, these are at best fleeting and are quickly corrected.  We therefore believe that, in spite of these momentary inefficiencies, securities prices are always fairly set given that all available information is quickly reflected in a given security’s market value.  The fact that this price may fluctuate as new information is processed by market participants has no bearing on whether one can accurately predict a security’s future performance.

Client portfolios will typically be constructed of institutional class, no-load, passively invested mutual funds from Dimensional Fund Advisors (DFA).  We are a DFA Approved Advisor.  See DFA and Aegis Financial Advisory  On occasion, we may also utilize no-load index funds and ETFs from the Vanguard Group.

As an advisor, we believe that our efforts are most productively spent trying to control what we can while accepting what the market gives us in return.  Our focus therefore is always on minimizing costs, increasing tax efficiency and investing broadly.  We believe our role as an advisor is to set an appropriate asset allocation for our clients based on their investment horizon, personal risk tolerance and required rate of return as a function of their key life goals.  Implementing this strategy using passively managed investments with the broadest possible exposure to a variety of relatively uncorrelated markets is, we believe, the most prudent strategy and the one that is in keeping with a fiduciary standard.  Once that strategy is set, our focus is on helping clients adhere to it regardless of what the market or broader economy may be doing at any given time.  Changes in the strategy should only be driven, we believe, by changes in the client’s situation and not by external factors.