Investment Approach

In an increasingly complex world, our investment approach is simple and straightforward:  To generate a cumulative return over your investment period commensurate with the investment risk you feel you can comfortably bear.  We believe the surest and safest way to build your wealth is to make smart use of efficient capital markets over the long-term, instead of making very risky and frequently unsuccessful attempts to “pick stock winners.”  Central to our role as advisors is bringing discipline to the investment process, helping you maintain the emotional fortitude to stick with a well-crafted investment policy and letting time be your strong financial ally.  

We are convinced that the market for publicly-traded securities is quite efficient at pricing actively-traded stocks.  In other words, we believe that spending our time and your money trying to identify undervalued stocks is not rewarding for us or you.  Market efficiency gives you a great opportunity to benefit from the attempts other investors make to earn outsized returns, because their trading drives stock prices to fair value. Typically, we do not analyze individual stocks or try to forecast which mutual funds will beat the market in any given year.  Instead, we seek to take advantage of price efficiency and the growth of capital by investing broadly across asset classes.

We believe that investing using passively-managed funds makes sense for most individual investors.  Like indexing, structured passive management allows you to invest in a large number of different stocks, eliminating individual company risk without sacrificing expected return.  It also provides ready access to a variety of investment styles so that your investments can be allocated in accord with your individual objectives.  Structured passive management relies on smart and careful trading to reduce costs and enhance tax efficiencies, letting you keep more of your money invested to compound and grow larger over time in dollar terms.  While we employ structured passive management as our core strategy, we recognize that you may have good reasons for keeping an existing portfolio of individual stocks, mutual funds, and/or ETFs.  In this case, Bluestone is prepared to work with you to realize an appropriate investment plan.

We concentrate our investment efforts on determining and maintaining the right asset mix so as to capture as much return as possible given your risk tolerance.  The five asset classes we focus on are U.S. stocks (across style classes), international stocks, investment-grade bonds, real estate investment trusts (REITs) and cash.  Over time, stocks tend to produce the highest return, while bonds and cash provide liquidity and moderate the extent of potential loss.  REITs earn an equity-like return, and their low correlation with both stocks and bonds help reduce overall volatility in a portfolio.  Mixing these asset classes leads to a better risk/return trade-off than would be possible with any one asset class alone.  The appropriate mix for you depends on how much risk you can live with to see your investments grow at a certain rate or, put another way, how much risk you are willing to take to earn above average returns.


Investment Strategy

The first step in working with Bluestone is to develop your Investment Policy Statement, which is based on a mutual understanding of your financial circumstances, future financial needs, investment period, return objectives and risk tolerance.  All our investment decisions are made in accordance with your Investment Policy Statement, and we review your Policy with you annually.  

Using your Investment Policy as our guide, Bluestone will allocate your portfolio among various asset classes.  Your individualized asset allocation is implemented through a structured passive management strategy that allows us to focus on (1) defining and incorporating an appropriate amount of market risk for you; (2) capturing as much of the available market return as possible given your stated risk tolerance; and (3) maintaining a disciplined investment strategy that avoids inappropriate reactions to unexpected price volatility.  This core strategy also gives you the opportunity to realize higher risk-adjusted rates of return with maximum tax efficiency.

We maintain your asset mix through periodic rebalancing to bring asset classes back within their target ranges if necessary. Rebalancing keeps your investments in line with your Investment Policy and minimizes the chances of making an emotional, rather than rational, investment decision.

Understanding and believing in your investment strategy is fundamental to investing wisely over the long term.  The above description is just an introduction to our approach;  if you would like to learn more, we invite you to contact us by clicking here.


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Bluestone Wealth Management LLC, 67 Winter Street, Keene, NH  03431    (603) 499-4737


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