Our Philosophy

There is an old saying  "May you live in interesting times," and that wish clearly came true for those of us in our 30s and 40s. Many of us exited college into a screaming hot economy built on insane overvaluations and high hope during the tech boom. We came back down to earth and repeated many of the same mistakes as we led up to the Global Financial Crisis in 2008, this time with an emphasis on real estate.

Then, in 2009, the narrative became one of doom and gloom. Then economy proceeded to sputter a bit, which surprised few. But, despite this, the stock market proceeded to take off on a 5 year tear as many investors sat on the sidelines, once again proving that conventional wisdom may be conventional, but it isn't always wise.

In a fair world that fully embraces the laws of economics and math, true "doom and gloom" would probably have already occurred. However, we live in a complex financial structure that doesn't always fit in the various boxes into which economic models attempt to place it. Good, old-fashioned supply and demand may be the base of the global economy, but there is a healthy amount of other factors at play, as well: central banks, diplomacy, military strength and technological advances, just to name a few. Given how much arguing there is among financial "experts" as to the causes of various past events, it is pretty safe to say that most pundits/politicians cannot predict the past, let alone the future. Connolly Asset Management (CAM) thinks that minimizing predictions (and eliminating bold bets) is a major key to long term success.

 

What's an investor to do?

For the person who wants long-term success, we believe it comes down to a few things.

Earn. For those of us in the middle class, the strategy has to involve actually making some money.

Save. It's not just how much you earn, it's how much you keep.

Manage Expectations. This comes in two forms. First, don't expect to live the high life until you can afford it...and even then, it might not be a good idea to live it. Second, if it ever even really existed in the first place, the days of the "easy" 12% stock market return are gone. Aim lower.

Quantify. With "securities" and other equities, you should have enough data to have an idea what to expect return-wise (but be prepared for the return to vary from expectations). Even though it is not technically an "investment" this also goes for permanent insurance. With more direct investments, such as physical real estate and small businesses, this is harder to do. That being said, these type of direct investments are great, if they can be done wisely.

Diversify.* For years, the mantra with diversification was to spread stock/equity holdings across industries and company sizes. However, in the truly scary times such as 2007-2008, we often see "all correlations go to one." Meaning  that everything goes down together, as the overwhelming majority of equities went down, along with most real estate markets. 

It's the opinion of CAM that true diversification happens outside of the stock market. How much you have invested in stocks (or mutual funds) can often say more about your risk exposure than the makeup of those stocks. That is why we generally recommend a lower percentage of assets in stocks/mutual funds than most other advisers.