Investment Philosophy II

The McGuire Wealth Management Team has an investment philosophy that has been sharpened with over 77 years of combined investment experience. We have seen many various investment fads come and go. We have learned that buying investments when they represent value, diversifying among them and holding those investments for the long-term is, in our experience, the most successful approach.

The famous investor John Templeton expressed this strategy another way. “Buy the world’s best bargains and have patience.”
This strategy is difficult for many investors. Investments are often bargains when there is negative company, industry, economic or monetary news. We like to define ‘patience’ as persevering under stress. Our experience has taught me that success in investing is not easy.
We use many methods to research investments. Investment study and experience play a big part. Primary and secondary Fundamental and Technical Investment Analysis are another. We also have a singleness of purpose. Investment research, selection, and management is our primary business.
Because we strive to accumulate and hold investments when they represent value, we believe we stand apart from another investment strategy.   This other investment strategy is currently popular.  It is Asset Allocation derived from the Modern Portfolio Theory. It simply states that an investor cannot outperform the broad markets over the long term. Therefore, an investor should simply diversify their investments over a range of investment classes: domestic and international large and small-capitalization stocks, various grades and maturities of bonds, commodities, real estate, currencies, etc.
Warren Buffett, one of the world’s most wealthy investors, likes to quip that his great success with investing proves the Modern Portfolio Theory wrong.
Our objection at McGuire Wealth Management with mechanical asset allocation as an investment strategy is that an investor may be buying investment classes that may be very expensive. Our strategy of trying to buying value as opposed to buying expensive investment classes just to diversify. We think that is foolish
The problem we have with Modern Portfolio Theory and asset allocation is that the methodology makes no value judgment as to the value and potential of an investment class. It cannot because it is based on a theory that an investor cannot predict the future value of an investment. It therefore simply diversifies over a number of asset classes.
Modern Portfolio Theory runs contrary to our conviction and experience at McGuire Wealth Management. To paraphrase Ecclesiastes, we believe, ‘there is a time in all seasons, a time to buy and a time to hold certain asset classes and a time to avoid them.”
Our investment approach is not perfect and does not guarantee results. What we do promise is to do our best for clients. We do not diversify just for the sake of diversification. We recommend those investments that we believe have the best potential for success and are in the best interests of our clients.

Technical analysis is based on the study of historical price movements and past trend patterns. There is no assurance that these movements or trends can or will be duplicated in the future.
Diversification does not assure a profit and cannot protect against a loss in a down market.