At Capstone Investment we have a clear process for investing. Through this process, we form an investment plan, implement it, monitor it, and make portfolio changes it as we see opportunities arise. We see ourselves as active stewards of your investment assets.
Most advisers use the landmark work of Modern Portfolio Theory to drive their investment strategy. This award winning work was done by Harry Markowitz in 1952. It centered on how an investor can allocate their money between cash, bonds, and stocks. We believe that many new tools and strategies have emerged since Markowitz’ pioneering work more than 50 years ago. We believe in using those tools and strategies to deliver a post-modern portfolio (also referred to as an Essential Portfolio) to our clients. The thrust of these portfolios is to utilize more asset types that have little correlation to one and another. Thusly, we attempt to deliver returns with less volatility than traditional portfolio managers allocating only amongst stocks, cash, and bonds.
We do not believe in buy and hold strategies of stocks, bonds, and cash in our current market environment (known as Strategic Asset Allocation). Those strategies perform very well when you are in a bull market. In such markets, you can just set sail with the wind at your back. Until the next long term bull market begins, we believe a more tactical approach is called for-rowing when there is no wind and tacking when there is a headwind. We utilize a more tactical approach, including when appropriate alternative investments with low correlations to the equity markets.
For fee-based accounts our process includes:
Deciding what assets to invest in and allocating the portfolio based on your needs and the current market environment.
Selecting managers for each investment based on a due diligence process.
Monitoring and reporting on your account on a quarterly basis.
Repeating our due diligence screens at least quarterly on your existing managers to make sure their performance is satisfactory. If not, managers may be placed on a watch list and/or replaced in your portfolio.
Analyzing economic trends and opportunities, making changes in your portfolio as warranted to try to maximize returns and/or reduce risk.
In a very real sense, we simply try to follow the Golden Rule. Our process is designed to put your interests first. We use our expertise to treat you as we would like to be treated.