Smart, Strategic, Sound

Smart

Knowledge and wisdom are not the same; but both are essential elements of “smart” decisions, which will most likely occur at the intersection of experience and good judgment.  

This intersection is reached with a balance of knowledge and wisdom – of quantitative and qualitative analysis – and is the foundation of ACI's value to clients.

As for knowledge, ACI leverages more than a decade of experience in its quantitative investment research, asset allocation and risk management.  

As for the wisdom, good judgment will have an investment advisor or financial planners not only understand the numbers they are analyzing – but go beyond them.  

This qualitative analysis may include the review of market sentiment, historical patterns, political, geo-political, market and economic cycle factors, fund management style, and corporate ethical behaviors.

More importantly, the good judgment aspect of “smart” decisions will result from the applied virtues of patience, simplicity, humility, frugality and moderation.  

 

Strategic

Prudent investing and financial planning strategies will prepare for what is to come – not react to events as they occur; therefore, a strong defensive strategy is paramount to a successful offensive strategy; risk management trumps reward chasing; time in the market is favorable to timing the market; and life planning precedes financial planning.

It has been said that “history does not repeat itself; but it does rhyme.”  

A big picture view of market and economic cycles, therefore, will have a prudent investor slowly and methodically preparing for the next stage of any given cycle rather than reacting hastily to market and economic conditions occurring in real time.

Structure certainly has its place in an investment or financial planning strategy.   Life and the world, however, are not often “structured” and certainly not constantly in alignment with each other.

 

Sound

Higher returns are always welcome but should not be the primary goal.   We do not aim to “beat the market” or we may place undue risk on our investment assets and potentially undermine our life goals.  

A sound investment process will employ the timeless virtues of patience, simplicity, humility, frugality and moderation and is founded upon the idea that we focus on those things that are within our control and spend little time and energy on those things we cannot control.

The greatest control determinants of successful portfolio management will include:

  • Asset allocation:   The greatest controllable determinant of investment returns, an appropriate and unique investment selection and diversification of stocks, bonds, and cash for a given individual, will allow for the minimization of risk and maximization of relative returns.
  • Asset location : The placement of investments in various types of accounts (taxable, tax-deferred) for tax efficiency is an often-overlooked aspect of investment strategy.
  • Savings rate:   How much, how often and when to contribute to (or invest in) the selected investments has a more meaningful impact on long-term returns than the actual investment selection itself.
  • Expenses:   High expenses slowly and effectively erode at long-term investment returns – low expenses are one of the greatest determinants of higher long-term returns. ACI's “fee-only” structure allows for the selection of the highest quality, low-cost mutual funds and ETF's in the universe of investments.

Investing and financial planning should not be exciting and emotion-provoking – it should be calm and comfortable. We simply aim to “arrive on time and unharmed.” This is the essence of a sound investment and planning process.