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Professional Investment Management

We believe in a long-term, globally diversified, and consistent investment strategy. We take an academic approach to investing and build portfolios around research. It is our belief that the stock market is extremely efficient. As a result, no one can selectively pick stocks and outperform the market for any meaningful length of time.

At the heart of our investment philosophy is Modern Portfolio Theory. This Nobel Prize winning theory attempts to maximize the portfolios return given an investors risk profile. We accomplish this by utilizing asset allocation, which is the split between asset classes like stocks and bonds to determine an individuals most efficient portfolio. We then customize it to their need, desire, and capacity to take risk.

Research has proven time and again that asset allocation is by far the primary determinant of total return.  As a result, we construct and manage broadly diversified portfolios using tax efficient and low-cost exchange-traded funds and mutual funds. We also tilt the portfolio to specific types of funds like small cap and value stocks which research has shown outperform over time. Each client’s portfolio is then monitored and re-balanced continually to maintain their ideal asset allocation to stocks and bonds.  This disciplined approach has repeatedly been proven to achieve optimal investment returns over time.

Our unique view on bonds allows clients to reduce risk and be patient sellers when it comes to investing in the market.  Viewing Bonds this way removes much of the stress that comes with the ups and downs of the market.  We use math, academic research, and input from you to accomplish this unique strategy.  Based on your projected cash flows we invest the appropriate amount of money in short-term, high grade bonds to preserve your cash allowing you to be unaffected by the fluctuations of the market. Knowing this you can confidently wait out even the worst bear market having your cash available when you need it. 

Ultimately, it’s your personalized financial plan that guides how we invest your portfolio. We are not just trying to get you the best returns possible but more importantly making sure you have the best chance of achieving your goals.


Dimensional Fund Advisors (DFA)


A core holding at Phillip James are Dimensional Funds. These unique mutual funds are only available through select financial advisors and have a long history of applying academic research to practical investing. They utilize equity and fixed income strategies designed to target higher expected returns (Price, Size, & Profitability). We also utilize other low-cost ETFs and mutual funds when it makes sense in a client's portfolio. 

Traditional Approach to Investing


Many people view investing in the stock market as trying to find those stocks that will outperform and buying those, while excluding all the other stocks within that asset class, then selling the stocks once they are deemed to be over-valued. The issue with this methodology is that the market is made up of many investors all trying to do the same thing, outperform each other. This competition is what makes the market so efficient and is why it is so difficult, if not impossible, to outperform the market consistently overtime.  This is turn leads to higher turnover and excess costs.


Low Odds of Success

A fraction of the mutual funds that survive and beat the index they were tracking. This is partly due to the efficiency of the markets as mentioned above but also because of the fees they charge. The costs of these actively managed funds are much higher than their index counterparts because of the additional staffing, software, and even marketing expenses that go into these funds. 

Percentage of mutual funds that survived and beat their index for 15 years, ending December 31, 2016

Percentage of mutual funds that survived and beat their index for 15 years, ending December 31, 2016

Evidenced Based Approach - Tilting towards the Factors

Realizing the markets are efficient, we build portfolios around academic research and historical data. What we find in the research and data are "Factors of higher expected return", not only in the US Market, but in the International Developed and Emerging Markets.  These factors include the size premium (Small Cap Stocks vs. Large Cap Stocks), relative price premium (Value Stocks vs. Growth Stocks), and profitability premium (Highly vs. Low profitability companies).  These factors are backed by data showing reasonable economic basis.  They are consistent, pervasive, and cost effective to implement. We structure client portfolios to capture these premiums while keeping the portfolio diversified, tax efficient, and keeping costs and turnover at a minimum. 


The Role of Bond in Your Portfolio

Many advisors simply use bonds as the traditional tool to diversify a portfolio and lower volatility.  While some bonds can certainly be used to reduce the volatility of a portfolio, many bonds can be just as risky as stocks, potentially increasing volatility.  The data shows, the risk/return profile for bonds to be not as favorable as stocks.  Therefore, bonds should not be used to reach for additional return or yield.  If an investor wants to take risk and be paid to take risk they should do so in stocks.  Bonds should be used as a cash preservation tool, providing a source of liquidity during a market downturn.

Depending on your goals and resources you may need cash from your portfolio within a certain number of years.  When you invest in bonds especially the right kind of bonds, you have removed a portion of your portfolio from the volatility of the market.  This allows you to be a "Patient Seller" when it comes to stocks.  Being in this position gives you the power to not panic in a bear market or have to sell stocks at the worst time to fund retirement or any other goals.  By doing the proper planning upfront and understanding your cash needs you can confidently invest in the market. 

The key is to invest in the right bonds is making sure they are Good Quality and Short-Term (1-5 years).   Good quality being, "High-Grade" bonds rated AA or AAA.  When investing in Municipals make sure they are General Obligation bonds as opposed to revenue bonds. Stay away from "Junk Bonds" and Long-Term Maturities as these tend to get hit the hardest in a Bond Bear Market.