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Our Investment Philosophy

 

“There’s no dollar sign on a peace of mind, this I’ve come to know.”
- Zac Brown Band

We believe our approach to investment management is more advanced than clients are likely to encounter in most other settings. For example, we avoid generic "risk bucketing" and other shortcuts that can interfere with an investment plan truly attuned to your specific needs.

As market conditions change, we stay true to grounded, long-term objectives while seeking opportunities to improve portfolios mindful of tax efficiency. We are also entirely transparent about our fees and our only source of compensation is from our clients, never any products we utilize.

Our investment philosophy is inspired by Albert Einstein's guidance to "make everything as simple as possible, but not simpler.”

Here’s how we approach investing …

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it starts with Values

When people think about investing, they tend to jump right to “What should I invest in?” 

It’s easy to be dazzled (and possibly overwhelmed) by the possibilities. Should I buy Tesla? What about Bitcoin? What about actively managed vs. index funds?  

And it’s easy to be caught up by investor psychology, which is hyped by the media day in and day out. If I don’t buy now, will I regret it? How low can this market go?  

Without considering the proper context of your unique situation, these questions are unanswerable. In fact, they can actually be a distraction—and even a danger. 

Before thinking about specific investments, we need to answer three essential questions and then control the controllables.

  • Institutional investors, such as insurance companies and pension funds, always know the “why” behind investment decisions. There’s a larger financial purpose, and investments are there to serve it.

    Individual investors also need to know their path. That means quantifying the financial decisions that support your vision for the future. Doing so can seem like an overwhelming task, but it’s essential. We help guide the process and make it easier.

    The result is NOT static. Our lives change—in ways we like, and sometimes don’t like or can’t anticipate. An effective plan must reflect where you are today and accommodate change.

  • TV commercials from large financial service companies tell you that your money exists to let you walk on the beach during your retirement years. Yes, spending time how you’ve always wanted is an important goal for most people. But in our experience, clients’ desires go far deeper.

    In most cases, family is the operative word. Often people value their children’s financial well-being higher than their own. They care about their kids’ education, about their own healthcare so as to avoid being a burden, and about leaving something behind.

    All these and more must be quantified to the best extent possible—in dollars—without falling into the trap of false specificity.

  • Mike Tyson famously said, “Everyone has a plan until they get punched in the face.” Investors DO get punched in the face! Down markets can be painful, even when we remind ourselves to think longer-term as we remember there’s no such thing as higher returns with less risk.

    In our approach, we focus on how much loss—in dollars and percentages—a client can endure for up to two years (since beyond two years, markets tend to recover, historically speaking). This is important, because over longer time periods, stock market corrections and economic recessions are a matter of when, not if, they will occur. Having a plan to navigate those periods is critical to long-term success.

We believe that notable companies generate a return for their shareholders over time and we embrace those fundamentals at EverNest. To create sustainable wealth, we leverage a deep understanding of the ever-evolving market and match that knowledge with your goals.

While financial planning and investing can feel complex and overwhelming, our goal is to inform and educate you as we partner to reach your financial goals. We believe this requires empowering you with the “whole story” behind both risks and potential positive outcomes.

CONTROL THE CONTROLLABLES

We’re not quite to investment selection, but now we’re close. There are two “controllables” that impact what you keep of your investments. Keeping more is ultimately what drives success, in our experience.

  • You have to know what these are so they can be controlled. Some things are worth paying for—and some things aren’t.

  • Minimizing taxes is ideally a team effort that also includes your tax advisor. There’s an interplay of many factors: how your investments are titled; the types of accounts you use; holding periods; tax rates and many more.

Success requires keeping on track, and keeping on track requires knowing and staying within your comfort zone. It’s important to spend the proper amount of time assessing your willingness to take risks. Then, over time, you also need to measure the accuracy of that assessment.

SELECTING INVESTMENTS

Now with a plan in place and controllables controlled, it’s time to select investments and assemble a portfolio.  

We won’t go into detail here, but at the highest level, we see three main aspects to consider.  

  • Valuation is first and foremost. For long-term investments, buying right is paramount. This rings true for every business owner considering the purchase of a business. It’s just as true when we’re talking about buying shares of another firm via the stock market. Valuation is essential across the investment spectrum: large and small company stocks, international stocks, real estate, and bonds.

  • Fundamentals are also an important consideration. As in sports, there are fundamentals in business. Examples include revenue, margin, profit, return on assets, and level of debt. Stock-market investors tend to focus on the rate of change in fundamentals more than their absolute levels. The same principles apply to the economy at large and the fundamentals of many different investment types.

  • Investor psychology is less important than the prior two for long-term investors, but it tends to get the most attention. We do consider factors such as investor sentiment, but it’s a supporting factor. While there are many ways to measure investor psychology, we seek to follow Warren Buffett’s advice to “be fearful when others are greedy and greedy when others are fearful.

 

Periodic tune-ups

Just as our cars need tune-ups, so do customized financial and investment plans. 

With cars, bumps on the road can cause imbalances and the need for realignment. With financial and investment plans, the cause usually changes in life situations—and sometimes the realization, during down markets, that one’s actual risk tolerance is a bit different than one thought. 

Experiencing losses in pursuit of achieving financial goals is inevitable. However, carefully quantifying your needs for spending and aligning those with the right type of investments can help maximize your probability of success. 

As we do so, we are always sure to ask the key questions and control the controllables. We all have one life to live, and our goal is to help you do so peacefully.

 

Committed Allies

Let us know how we can help you.

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