Our Investment Management Philosophy and Process

  • We use a top-down macroeconomic approach based upon in-house economic and fundamental analysis. 
  • This approach, which we have used for the past forty years, assesses global economic, monetary and market conditions to determine the future direction of financial markets and their influence upon individual industries and companies. 
  • As part of our philosophy, we believe that inflation, interest rates, liquidity/credit, valuations and risk tolerance are the primary forces that drive the flow of investable money.
  • In simplest terms, our philosophy is also based upon the belief that there are only three primary investment alternatives - either global or domestic - where investable money can go.  These include equities (stocks, private placements, owning a business), fixed income (bonds, CD’s, money market funds), and real assets (real estate, commodities.) 
  • We believe the flow of money between these alternatives is due to the five forces listed above. [1]
  • We also believe these same forces affect the flow of cash within equity markets between market sectors, such as Energy, Financials or Consumer Staples, and between individual industries. 
  • Markets can only go up when cash is present and moving toward them.  Therefore, through our analysis we determine where current and future cash flows will occur within financial markets, and adjust portfolios to take advantage of these cash flows. In essence “we determine where investable cash is flowing next, put ourselves in front of this flow, and then wait and let the cash flow hit us.”

 

[1] It is our opinion other financial instruments or derivatives, such as options or swaps, are not investments, rather they are a speculation or hedge.