Investment Strategies


We choose the right mix of stocks and bonds to provide long-term growth potential and an income stream. The question to ask is how these qualities fit into your investment strategy. Each client has individual objectives and our goal is to meet those objectives in a personal and welcoming environment where we can maximize growth, reduce risk, and effectively manage your assets.

Our role is to measure your risk tolerance and then effectively manage that risk day-to-day in order to satisfy your investment objectives. A versatile combination of stocks, bonds and alternative assets such as options is the best scenario. By diversifying your investments and putting money into stocks, bonds and alternative assets, you ensure some safety while leaving opportunity for above-average returns for your investment portfolio.

Objectives:


  • Capital Appreciation – A rise in the value of an asset based on a rise in market price. Essentially, the capital that was invested in the security has increased in value, and the capital appreciation portion of the investment includes all of the market value exceeding the original investment or cost basis. Capital appreciation is one of the two main sources of investment returns, with the other being dividend or interest income.

  • Long Term Growth – An investing strategy or concept where a security will appreciate in value for a relatively long period of time, whether or not the growth is initiated immediately or later on. Long-term growth is a relative term, as the investing horizon differs across investing styles, but the perceived appreciation in the security remains the same.

  • Income Generation – A combination of high-dividend, low volatility stocks as well as investment grade high quality corporate bonds and other income producing investments.  Also includes premium generated from selling out-of-the-money options.

  • Diversification – A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within a portfolio.  Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in a portfolio are not perfectly correlated.

  • Downside Protection – The use of an option or other hedging instrument in order to limit or reduce losses in the case of a decline in the value of the underlying security. Downside protection often involves the purchase of an option to hedge a long position. Other methods of downside protection include using stop losses or purchasing assets that are negatively correlated to the asset you are trying to hedge.

Asset Classes:


  • Stocks – A type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.  There are two main types of stock: common and preferred. Common stock usually entitles the owner to vote at shareholders’ meetings and to receive dividends. Preferred stock generally does not have voting rights, but has a higher claim on assets and earnings than the common shares. For example, owners of preferred stock receive dividends before common shareholders and have priority in the event that a company goes bankrupt and is liquidated.  Also known as “shares” or “equity.”

  • Bonds – A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities.  Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents.

  • Alternatives – An investment that is not one of the three traditional asset types (stocks, bonds and cash). Most alternative investment assets are held by institutional investors or accredited, high-net-worth individuals because of their complex nature, limited regulations and relative lack of liquidity. Alternative investments include hedge funds, managed futures, real estate, commodities and derivatives contracts.

  • Options – A financial derivative that represents a contract sold by one party (option writer) to another party (option holder). The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date (exercise date).  Call options give the option to buy at a certain price, so the buyer would want the stock to go up.  Put options give the option to sell at a certain price, so the buyer would want the stock to go down.

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