Investment Philosophy - Rightpath Investments & Financial Planning, Inc.

Evidenced Based Investing – A Scientific Approach

Investing—by its nature—tugs at our emotions. In a capital-driven economy, what we need and want—even our very being—appear to be driven by our dollars. So, when we put those dollars into investments, there is a tremendous amount at stake. It’s personal.

Two major characteristics are necessary to be a successful investor. First, you need to have an investment philosophy to inform your strategy. Equally important, is the ability to manage your behavior in the face of strong emotions.

These emotions—mostly greed and fear—will conspire to steer you off course. But the two elements are related. By maintaining a philosophy you can understand and believe in, you will have a guide star and a superior chance of navigating the emotional roller-coaster. The majority of investors, the data reveal, substantially under perform the funds they invest in by frequently giving in to their emotions. Inevitably, they wind up facing unnecessary obstacles to achieving their goals.

Among the most important things you can learn from an investment advisor are the tenets of their investment philosophy. If you have already developed your own philosophy, this will help you find a match. If you don’t have a philosophy—or are calling it into question—understanding the adviser’s philosophy, and the logic behind it, will go a long way toward helping you make a wise choice.

Our philosophy devolves from the power of decades of financial science and ongoing research. Despite its detractors, it continues to have our allegiance.

Strategic Asset Allocation

How you apportion your portfolio between risky assets (equities) and safe assets (high-grade, short-term bonds) will dominate portfolio returns and volatility.
Attempting to time the market—being in while its going up and out while its going down—is a treacherous game; successfully played by few, if any, investors.
Tilting equities toward riskier small cap and value stocks will increase returns over time.
Disciplined rebalancing will force you to buy low and sell high; raising the chances of defeating the emotional demons.

Passive Implementation

Public securities markets are generally efficient, meaning information is rapidly absorbed into prices.
Mispricings—necessary to the success of active investing—even when they emerge, are difficult to exploit consistently. Consequently, generating alpha (beating the market) is a significant challenge, especially after taking costs into account.
Remember, active investing is a zero-sum game. In the aggregate, all investors own the entire market and its average return. So out-performance of the winners mathematically comes out of the hides of the under-performers. There are no Lake Wobegons in investor land.
In trying to identify active managers/strategies that might reasonably be expected to outperform their benchmarks, it is exceedingly difficult to separate skill from luck.

All of which means we develop a strategy that permits you to stop looking at the stock reports every day. (But if you must, go ahead and look). Be confident that your Investment Policy Statement (IPS) will allow you to stopping worrying—or getting overly enthusiastic—about every market gyration or hot stock tip. Instead, if you see a trend you are interested in, just call your RightPath advisor. Hear about an industry you might want to invest in? Call us. Concerned about a change in market directions? Give us a ring.

With any idea, question, or concern that arises over your investments, all you need to do is discuss it with your RightPath advisor. We will walk through your wealth management plan and your IPS with you, discuss whether or not the issue you are raising merits a change to either one, and make the necessary changes—or support you in sitting tight, if that’s what’s called for.

Our investment philosophy is to be so well prepared to meet your goals and be ready for what the markets might throw at us that you can put all of your emotions in to planning and living your life and let the science take care of the investments.

A Fiduciary Approach.

Unlike institutions, such as pension plans and trusts, individual investors are not legally required to take a fiduciary approach in managing their investments. Nor are they required to hire an advisor who has a fiduciary obligation toward them. They may, if they so choose, simply hire a stock broker who may not put the investor’s interests first. Nevertheless, RightPath believes all investors are well served by adopting the tools and practices that fiduciaries use in managing their portfolios. First among these principles, of course, is that the portfolio is specifically tailored to the goals and concerns of the client. RightPath does not provide any advice or recommendations without first thoroughly assessing your individual needs and circumstances.