Our team goes well beyond the traditional asset allocation of the commonplace financial advisor group. When we construct a portfolio, we are looking to build a portfolio of strategies. We look for those strategies to be managed by a specialist in each category, or managed by a disciplined set of time-tested rules.
Scott S. Brooks, Gold Coast Financial Group
My first job in this business was on an agency trading desk in 1995, during the dot com mania. I witnessed a lot of different investing styles and studied who built tremendous fortunes and who lost their shirt. I learned some very important lessons in investing that have held true since that first internship. I learned that the big money is made from participating in the big trends. I learned that the most successful investors have a set of rules that are disciplined and unemotional, because a sell discipline is just as important as when to buy. The people that allowed their conviction to get in their way, holding stocks as they continued to fall, would lose money time and time again.
I also learned that nobody likes to lose money. It doesn’t matter if someone is 25 years old, or 75. So I learned that ultra-conservative instruments and cash are viable options during major bear markets – because there is no good reason to be over exposed when the markets are falling and your net worth is diminishing.
If an investment is going down, there is always something going up, staying flat, or going down less.
With those considerations in mind, and the institutional money management available through Claraphi Advisory Network, we construct our managed portfolios. I’ve never advised a plain vanilla traditional ‘strategic asset allocation’ of stocks and bonds. With the dot com-bomb bear market and the real estate bubble bursting bear market, I don’t know how anyone can choose a 100% passive, fully invested, strategic asset allocation. If an investment isn’t working, I want to actively find something that is working.
I think our team goes well beyond the traditional asset allocation of the commonplace financial advisor group. When I construct a portfolio, I build a portfolio of strategies, where each strategy is managed by a specialist in that category.
Beyond the market based strategies, I acknowledge the track records of the college endowments throughout two disastrous bear markets. The large endowments are conspicuously over-weighted in non-traditional investments, more commonly known as alternative investments. For clients that can sacrifice immediate liquidity for an allocation to the non-traded, alternative investment universe, these types of investments help to reduce the correlation to market-based securities, as they are often not traded and not exposed to the daily volatility of the public markets. As well, the illiquidity premium often yields a higher annual distribution.
Please reference my white papers to get a better understanding of my investment philosophies: (1) Active vs. Passive Investing (2) All Weather Portfolio Construction (3) College Endowment Investing. And if you have a better way to invest, I’m open to suggestions. After all, I do “eat my own cooking!”
Institutional & Endowment Models: We strongly believe that individual investment allocations should employ the techniques, tools, and knowledge of institutional strategies whenever possible.
Strategy Diversification: We believe that asset allocation is the most important determinant of a portfolio’s risk and return over time. We design globally diversified portfolios that cover the major asset classes of domestic and international equities, fixed income, and alternative investments. We then utilize a variety of disciplined, well-researched strategies to navigate the different asset classes to develop a true global macro portfolio.
Independent Thinking: We believe that the most effective investment approach is through independent, objective thinking. We are an independent firm employed by our clients. Our independence allows us to seek out best-in-class investments.
Capital Preservation: We believe our job is to protect and build your wealth. We do this by identifying short and long-term risks, and designing strategic and tactical portfolios to prudently manage these risks in order to preserve capital today and grow your assets in the future. We use our global tactical approach because it emphasizes risk management. We also want to minimize the negative impacts of expenses, taxes, and inflation. We are committed in identifying strategies that can significantly improve the chances of the success of your long term financial plan.
Pundit Predictions: The future is impossible to predict with any degree of precision. It is important to have adaptive, tactical, dynamic, unconstrained strategies as a portion of your overall allocation.
Growth vs. Risk: While earning a competitive or even superior rate of return is nearly universally desirable, managing risk exposure is the most important consideration in portfolio design.
Trend Following: Trends can persist for extended time periods until they change, often dramatically. Using different tools to identify these trends, our goal is to participate in the upside of the trends and sidestep the tsunami waves that ultimately crash on the shoreline.
Discipline: The biggest obstacles to long term success are unrealistic expectations and lack of discipline. When a strategy doesn’t work, investors often jump ship for the next best thing. In contrary, when a disciplined, time-tested strategy has a drawdown, it’s generally the best time to increase your exposure. Investors tend to be emotional and lack discipline, both of which lead to poor decision making.
DIY (Do It Yourself): Luck often overshadows skill, especially in the short run. We have seen too many hobby investors succeed with a few lucky trades only to fail in the long run. Trying to save on a management fee only to lose your shirt is a classic penny-wise, pound-foolish cycle. Just because Warren Buffet promotes ‘buy and hold’ doesn’t mean you hold your “hot stock” tip as it heads toward zero.
After our initial discovery meeting, our follow up meeting will often include an investment plan. We strongly support an institutional endowment style of portfolio construction versus a traditional retail asset allocation. We promote an allocation of strategies coupled with non-traditional investments to reduce volatility.
When constructing an allocation, we use different strategies to work in different market environments, with the end goal of increasing our clients’ net worth year over year, despite the market trends. Beyond the traditional investments, there are a tremendous amount of nontraditional and alternative investment opportunities to add diversity to your allocation.
Most people do not want to get caught up in a bear market or have a down year. While there are no straight lines in investing, using various methods and concepts to build a portfolio, our objective is to increase our clients’ assets year after year, while managing risk and mitigating volatility.
Our portfolios are constructed to be dynamic, flexible, and globally diversified with exposure to many different market segments and asset classes.
We believe that over time expenses, taxes, and inflation can have negative impact on your portfolio. We are committed to eliminating unnecessary investment costs and identifying tax savings strategies that can significantly improve the chances of the success of your long-term financial plan. For taxable accounts, it’s important to minimize tax consequences. While our investment allocations are not solely based on tax implications, tax consequences are taken into consideration in the design of your portfolio.
Based on your extensive personal profile, we will prepare a no obligation, personalized investment proposal, explaining the various concepts and methodologies that go into its construction.
Sample Asset Allocation of Strategies
“Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world.” — Joel Barker
GCFG Wealth and the Gold Coast Wealth Advisors (GCWA) comprise the portfolio management division of our firm. GCWA manages a variety of investment models, most of them utilizing the methodologies derived from the subscription based research tools of Dorsey Wright & Associates (for high relative strength investing) and Investor Business Daily (for CANSLIM type) investing. There are strategies available for all of the major assets classes (U.S. Equities, International Equities, Commodities, Fixed Income, and Foreign Currencies). GCWA offers growth models, income models, strategic, tactical, and specialty models.
Every decision in the disciplined investment process has a healthy appreciation of the upside and potential downside. The key to success is knowing when the trade-off of risk for gain is prudent and when it is not, knowing how to calculate potential gains versus risk exposure. As a general rule, it is best to hold winning positions as long as possible and remove losing positions. This focus makes for tax efficient models as well. Hold the winners and sell the losers – not the opposite!
Your overall asset allocation may consist of a variety of strategies to develop your comprehensive portfolio. We are partnered with Claraphi Advisory Network for synergetic expertise, institutional managers, performance reporting, and more. Our team monitors the available investable universe to ensure client portfolios are optimally positioned with consideration for each client’s risk tolerance, goals, and objectives.
With creativity and passion, Claraphi Advisors can offer innovative and customized investment solutions, with disciplined and goal-oriented strategies.
Claraphi is our managed account platform, providing access to third party asset managers, custom modeling, tax awareness, and performance reporting. Claraphi offers access to institutional money managers to retail investors at a fraction of the standard asset minimums. These money management services were previously reserved for institutions and ultra-wealthy individuals.
Claraphi uses technology and intelligence, with integrity, to offer a balance of tangible and intangible investment services to help clients accumulate and preserve wealth. Accounts have the ability to be custodied at Schwab, TD Ameritrade, or Foliofn.
Claraphi is one of the few truly independent firms. With a focus on recruiting only the most successful financial professionals, Claraphi advisors have the discipline, experience, and training to develop and grow their valued clients’ assets. Claraphi offers a unified platform that brings sophisticated tools and institutional money management to investors and their affiliated advisors.
eMoney Advisor powers our financial reporting and account aggregation platform. It enables our clients the powerful functionality of linking all of their financial institution information onto one website, listing all assets and liabilities, updated on a daily basis. We call it www.mydailyworth.com.
With this tool, we are able to generate a variety of financial reports to provide clients a better understanding of their complete financial picture. Our clients are able to view their entire net worth (all assets and liabilities) on one website on a daily basis.
This invaluable tool is complimentary and part of the complete package when working with our team.