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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. |
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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. |
