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Bolen | Dodson & Associates' investment philosophy is the result of our almost twenty years in the investment business. We employ a "five-step process" to investing that is logical, systematic and disciplined. We employ a top down, bottoms up, multi-capitalization investment philosophy seeking to generate incremental returns above the broad market averages, adjusted for risk.
Our goal is first to protect your wealth from sustained losses and from the ravages of inflation; and second to grow your wealth over time consistent with your ability to handle market related risk. Our investment strategy works to grow your wealth in good markets while working to preserve your wealth in poor markets.
Our mission is for you to live meaningful and inspired lives, free from worry about your money matters, supported by your investment portfolio. If desired, we will help to build enough wealth to pass a substantial nest egg on to your heirs in a tax efficient manner.
We believe the market is semi-efficient. That is, it is difficult to out-perform the broad market averages consistently, net of fees, transaction costs and taxes. However, it is our position that adding incremental return (alpha) is possible and worthy of pursuit. By knowing the limitations imposed by the market’s efficiency, coupled with a logical, systematic and disciplined investment approach, we put the odds in our favor to succeed in our endeavor to maximize risk-adjusted returns over the long term.
We construct diversified portfolios of marketable securities that are consistent with your time horizon and ability to handle interim volatility.
That generally means a greater or lesser percentage of equities and a longer or shorter maturity of fixed income securities. For investment periods of five years or longer, we encourage greater allocation to equities.
Bolen | Dodson & Associates combines fundamental and technical analysis to create individualized portfolios, managed on a tax-efficient basis. Fundamental analysis refers to the underlying characteristics of the security, such as sales, profits, earnings quality, growth rates, margins, valuation and management. Technical analysis deals with investor psychology, changes in supply and demand, trends, momentum, etc. Fundamentals tell you what to own. Owning fundamentally sound securities and/or sectors at appropriate valuations is your first line of defense. Technical analysis tells you when to purchase or sell the security. Timing the commitment is a crucial step to maximizing risk-adjusted returns.
Having a logical, systematic and disciplined investment philosophy that incorporates both market psychology and fundamentals acts to lower risks and enhance returns, dampen the negative effect from market declines, and likely avoid periods of decimation altogether.
Of course, there are no guarantees regarding future performance, but discussing our portfolio construction methodology is our attempt to instill your confidence in our process.
Bolen | Dodson & Associates employs a five-step, top down/bottoms up process to investing. Movements in the market and in specific size, style and sectors of the market explains about 80% of the movement in a specific security, on average. The market itself explains about 30% and the relevant size, style or sector explains another 50% of the movement. Therefore, it is imperative to focus substantial time and energy on these components of return when managing portfolios.
We believe in the benefits of diversification, which reduces volatility without reducing return. However, there are also risks of over-diversification, which tend to dilute returns. Within reason, we advocate over-weighting size, style and sectors that have the most potential to generate incremental returns. We also believe in rebalancing portfolios, whereby we trim winning positions over time and money is redeployed into the best risk adjusted opportunities at that time. This forces a sell high, buy low discipline.
Depending on the size of the portfolio we are managing and the client’s desires and objectives, we will own Exchange Traded Funds (ETFs), mutual funds, individual debt and equity securities, or a combination of all three.
ETFs are a very cost efficient means to get sector, "size" (large or small cap) and "style" (growth or value) exposure. We select mutual funds that exhibit superior characteristics and to gain exposure to certain aspects of certain markets.
We employ a "five-step process" to investing that is logical, systematic and disciplined. Click here to learn more.
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