The design of a client’s investment portfolio is as unique as each client’s needs and objectives. However, our investment approach is guided by several fundamental principles based on years of investment experience.
 

1. Risk Management Strategies

Risk is inherent in almost all aspects of dealing with money. Putting “the money in the mattress” may have an element of risk because of the long-term effects of inflation on purchasing power. If interest rates decline dramatically, the reduction in supplemental retirement income can be significant. The equity markets may be risky. Excessive volatility can create emotional pressure and may increase the risk of making ill-timed buying or selling decisions. Seeking to mitigate risk is inherent in our design of each client’s portfolio.

2. Time Horizon

Potentially growing wealth from stocks and bonds requires a time horizon long enough to ride through the ebb and flow of market fluctuations. Although no one can predict the markets with any certainty, we believe the minimum holding period for capital market assets should be three years with the expectation of return considered on a typical market cycle of five-to-eight years. We are careful to segment assets into time horizon “buckets” to address short-term needs with long-term objectives.

3. Model Design – Asset Allocation

Asset allocation has been shown to explain nearly 92% of the variability in the performance of an investment portfolio.¹ Getting the appropriate mix of stocks, bonds, and other investments is critical in pursuing our clients’ investment objectives and is the starting point in our investment process. While asset allocation does not ensure a profit and may not protect against loss, it can play a key role in establishing a sound investment strategy and reducing risk.

4. Quality and Investment Selection

Owning quality investments may help weather the volatile storms of the equity markets. The direction and amplitude of market cycles is not easily predicted, and matters may be made worse by trying to time the market. Owning quality securities (those that have historically provided long-term capital appreciation) can help put the focus on the investment as opposed to the market. We believe Stifel’s robust research platform is fundamental in the security selection process.

5. Diversification

Quality today does not guarantee quality tomorrow. That is why diversification is essential to our strategy. Diversification among and within various asset classes can help mitigate risk of being wholly exposed to a specific investment that may underperform or has a sudden drop in value. While diversification does not ensure a profit and may not protect against loss, it can play a key role in establishing a sound investment strategy and reducing risk.

6. Rebalancing

Disciplined rebalancing may help mitigate the risk of the portfolio drifting away from a targeted asset mix and may help to systematically “sell high” and reallocate to “buy low” during periods of market volatility or imbalance. A policy of systematic rebalancing is an instrumental part of our practice. Rebalancing may have tax consequences, which you should discuss with your tax advisor.

7. Service Expectations

The investment portfolio is periodically reviewed with you through all market conditions for quality and performance. Client meetings are scheduled at least semi-annually. Market and life events may dictate contact as clients’ needs require. Immediate access to client portfolios is available via Stifel Wealth Tracker and, at minimum, monthly statements and quarterly performance reports may be sent to the client.

¹Gary P. Brinson, Brian D. Singer, and Gilbert L. Beebower, Determinants of Portfolio Performance II: An Update, The Financial Analysts Journal, 47, 3 (1991).