What is your investment philosophy?
We believe in investing for the long term. It is
not possible to predict short-term moves in the stock
and bond markets, and we don’t try. We do not
make short-term trades. They would waste client money.
We make intelligent, long-term allocations of client
funds, considering the probable return and the probable
safety of the capital.
We believe that clients should seek total return,
not just dividends or interest. Long-term portfolios
that consist entirely of bonds or Certificates of
Deposit may appear to be low-risk, but in fact their
low long-term returns virtually guarantee that the
long-term investor will lose money after
income taxes and inflation. Research has clearly demonstrated
that a portfolio without any stocks is much less likely
to last for an investor’s lifetime than a portfolio
that includes stocks. Stock investments should have
a place in almost every long-term investment portfolio.
It is equally important, however, that the percentage
of stocks in the portfolio be chosen to accomplish
the investor’s specific needs. Some investors
should have 25% stocks and some should have 75% or
more. The portfolio should be designed based on the
client’s (a) comprehensive personal financial
plan, which establishes the investment objectives,
(b) risk tolerance, and (c) time horizon, or when
money will be needed from the portfolio.
We minimize transactions because doing so reduces
transaction costs and income taxes.
We believe that, in many asset classes, low-expense
“index” or “asset class” mutual
funds or exchange traded funds offers the investor
the highest expected return with the lowest risk.
We use these mutual funds in client portfolios where
appropriate. An intelligently-designed, long-term
investment portfolio with little trading may be boring,
but it is best for the investor from the standpoints
of risk and return.
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What is your financial planning
philosophy?
Goal Setting. We believe that clients
must set their own goals. It’s our responsibility
to educate them in the financial planning process
and assist them with defining, quantifying and prioritizing
their goals.
Return Expectations. The financial
plan must be based on reasonable expectations. Expected
returns should be based on historical figures, net
of inflation and net of income taxes. Expected returns
must be adjusted to reflect investment expenses and
portfolio management fees.
Risk Tolerance. The investor’s
risk tolerance is crucially important in the portfolio
design process. Some investors are tempted to allocate
most or all of their portfolios to risky assets without
careful consideration of how they might react if the
markets were to turn down temporarily. An investor
can torpedo years of fine investment returns with
panic selling during a temporary downturn.
We want to be as sure as we can be that our client’s
personal tolerance for the inevitable ups and downs
in the portfolio will be high enough to enable him
or her to hang in there when the going in the financial
markets gets tough.
For this reason, we focus a lot of energy on our
client’s risk tolerance. First, we do a Risk
Tolerance Questionnaire that provides a scientifically-valid
starting point for the investor’s risk tolerance.
Next we show the investor what market history can
teach us about market ups and downs in the future.
We look at actual historical periods and show our
client what his or her portfolio would have done,
percentage-wise and dollar-wise, if he or she had
been invested during those down times. Seeing real
examples helps our clients make an informed decision
about the amount of risk they are comfortable with
in their portfolios.
Finally, unless a client’s risk tolerance is
on the higher side we encourage him or her not to
take much more risk than the financial plan indicates
is appropriate to accomplish the investment objectives.
We see no need for most people to take more investment
risk than is required to accomplish their financial
goals.
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What do you mean by “long-term”?
Five years or more.
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Are my investment accounts
insured?
Your investment accounts are protected by the Securities
Investor Protection Corporation (SIPC), and by
private insurance funded by your independent
custodian. Taken together, SIPC and private insurance
insure that you can withdraw the full balance of your
account at any time. The investments in your account
will fluctuate in value, and with any investment loss
of principal is possible. The insurance does not cover
fluctuations in value, but guarantees delivery to
you of the full balance of your account.
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What are the expenses in
a Posey Capital portfolio?
As an institutional investor, Posey Capital can provide
you with access to high-quality, low-cost investments
not available to individual investors. As a result,
we can provide you with professional portfolio management
and financial planning for a lower total cost –
including our management fee (see “Fees”)
– than the average no-load mutual fund portfolio
that you might choose for yourself. Whether you look
at extra services, investment returns or portfolio
costs, working with Posey Capital is a smart financial
move.
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What is your Privacy Policy?
Posey Capital will never disclose your name, address,
email address, phone number, account information,
financial information or other confidential information
to anyone without your prior consent. We never sell
mailing lists or client information.
In the course of serving you, we disclose appropriate
information with your consent to (a) regulatory authorities
in accordance with applicable law, (b) the independent
custodian of your investment accounts, and (c) attorneys,
accountants or other professionals you specify, if
you wish for us to coordinate their professional services
for you with your financial planning.
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