Invest Smart

The RPG Wealth Management Philosophy

We believe in our methodology

Diversification alone is not effective at controlling risk.  Investors must have a rigorous discipline that guides both their buy and sell decisions in the portfolio.  Significantly less than half of, even professional, investors can articulate the discipline that they use to make sell decisions.  The opposite of having a plan is to allow emotions to guide an investment decision which, quite frequently, leads to poor results.

Both valuation and sentiment matter.  Of course, investors must always consider the price that is being paid for an investment.  Yet, price does not always assure good results – especially in the short and intermediate term.   Emotions frequently win out in the short run and valuations often don’t matter during these emotional times (whether good or bad).  Technology stocks were not a good “value” in 1997 but continued to climb for more than two years.  Valuations in the stock market appeared reasonable to many in the summer of 2008 even though there were many indications that sentiment in the market had turned decidedly negative.

It’s better to invest with a safety net.  Diversification is not effective at controlling risk.  Investors must be willing to adjust their exposure to stocks.  We believe that the only way to materially adjust the risk in a portfolio is to be willing to reduce equity exposure when conditions are unfavorable and to increase equity exposure when conditions are favorable.  The safety net, in our methodology, is a stop-loss provision on all stock and other growth assets.  Study after study shows that the majority of an investor’s return will be dictated by market exposure.  Why then are even professional investors unwilling to do more than simply hold some pre-determined mix of stocks and bonds? Passively buying some pre-determined mix of stocks and bonds equates to little more than hoping that the strategy works out.  Hope is not a strategy.

Opportunities will always exist.  Regardless of the investment environment, something will be in favor and investors should be responsive in adapting strategies that are working.  Depending on economic conditions, investors might consider significantly increasing or decreasing allocations to cash, bonds, stocks, commodities, real estate, bear funds, and other investible asset classes.  In uncertain times, flexibility is of predominant importance.

Fixed Income Investments should represent stable value.  Some portion of an investor’s portfolio should be allocated toward assets of relatively stable value.   Rigorously defining the criteria for stable value assets is a must.   Drawdown exposure and return variability should be the first considerations when evaluating fixed income investments.

We believe in regular client communication

• Friday Market Update

• Individual Client Call/Meeting/Webcast (optional)

• Investment Committee Roundtable Webcast
• Quarterly Investment Review
• Quarterly reconciliation of the flow of funds

• Annual Review
• Comprehensive Financial Plan Update

We believe in Accountability and Transparency

• Web access via your independent custodian

• Statement from your independent custodian

• Quarterly Report from RPG including performance data, account reconciliation, and Outlook & Commentary Letter

Active management starts with a plan. Contact us today to get started.