Our Investment Philosophy

Our basic investment philosophy is built upon risk management. Every investment contains some degree of risk. Those investments with lower returns and perceived less risk carry inflation and purchasing power risk. We also need to consider taxes in the formula of return. What is the after tax return? Some people need to consider after income tax, after estate tax return.

Still, the major ingredient in risk management is diversification through asset allocation. Many people diversify by owning several different mutual funds. The problem is that they all may own the same underlying stocks. Having multiple funds which own the same stocks is not diversification.

We need to ask these three questions:

• Are we getting compensated for the risk that we are taking?

• Are we taking the risk that we expected?

• Are we measuring the risk that we are taking?

We have several options when deciding how to travel across the country; let's say from Orlando to Los Angeles. We can drive, fly, take a bus, train, or boat. All these forms of transportation may get us to our destination or objective, but each form of transportation carries a different degree of risk. Planes crash, boats sink, and cars encounter road hazards. Each risk is measurable; each form of transportation can be compared by risk and efficiency. No investment is absolutely safe just as no form of transportation is absolutely safe. We live in an uncertain world. We try to bring as much certainty as possible to the investment world by using the following twelve-step approach:

• Helping Set Objectives, Values, Time Horizon, and Cash Flow

• Risk Tolerance

• Tax Sensitivity Goals

• Asset Allocation and Diversification

• Investment Policy Statement

• Manager Search

• Manager Selection

• Stock Selection and Screening

• Overlap of Stocks

• Monitor

• Rebalance

• Report

We ask every investor to complete a risk disclosure questionnaire. This process helps us determine the degree of risk that is suitable for each individual. We are able to graphically show the volatility of various asset allocation models to determine one's risk tolerance.

For some people, reducing and eliminating excessive income tax and capital gains tax is a high priority. Three ways exist to pay taxes: you can compound your taxes, you can flatten them, or you can reduce and eliminate your taxes. Each person's situation is different. However, the axiom that we use is: "If you pay a tax that you could have avoided you lose the tax and the opportunity cost on that money forever." We strive to increase your after income tax yield on your portfolio.

After your objectives are established, a written statement is prepared outlining the allocation of monies into the various diversified classes of investment. Our focus is to meet your risk and return objectives over the stated period of time.

We then begin the manager search from a database of over 5,000 money managers. We use the best industry consultants to help us find the right manager for the asset class and style. Our objective is to put together the all-star team or the dream team for you by finding the best talent from all the money managers. We have a starting team, a bench team, and a farm team. We select the best and measure their performance. If they under-perform they are removed and someone comes off the bench to replace them.

It is the money manager's job to select the stocks. Our job is to see that they stay inside their specific style. We can screen the stocks selected based upon the criteria you select. We try to make sure that there is little or no overlap.

Monthly statements are produced and the portfolio is re-balanced periodically based upon the stated guidelines. Quarterly performance reports are provided to determine if we are meeting your objectives.