SIM's primary investment tenet is that equities outperform fixed income in the long term. In addition, long term investments should never be sold without first considering the after-tax consequences to the client portfolio. Since the taxation of capital gains is substantial, the sell discipline for each account may vary. We consider after-tax returns our most important focal point and the most important measuring standard. However, given the volatility of the market, it is important to create a portfolio that most adequately reflects the risk profile of the client, including the ability to endure market uncertainty.

In an era of increasing financial volatility, choosing the right investment counsellor or portfolio manager is one of the most important decisions investors can make about their financial future. At SIM, we firmly believe that the road to success in wealth management calls for a value-based, conservative approach to investing. Using this balanced approach, we strive to equal or exceed the long-term results of the major equity indices for our clients without having to be fully equity-invested.

The SIM investment philosophy follows this conservative and balanced investment approach. Portfolios are structured according to each client's investment objectives and constraints, risk tolerance and financial circumstances. Through analysis and collaborative discussion, a financial profile and risk-tolerance level is determined and an appropriate investment allocation strategy is developed and monitored regularly.

Research efforts are directed toward the selection of undervalued stocks in relation to their the asset value or long term earning power. Our time horizon is generally at least five years and we concentrate primarily on large cap companies. Thus, portfolios will generally have a lower price-earnings and price-to-book value than the market averages. Some of the stocks may be out-of-favour companies which are not popular among research firms. Often, in cases like this, we attempt to identify some catalyst, such as a change in management, that will allow the true value of the company to be recognized. However, in some cases, it may simply be a matter of time. Regardless, this focus on value should reduce the volatility of the portfolio, relative to the overall market, while still providing substantial returns.

Such things as financial strength, franchise value, management depth and asset quality are important factors going into the decision process. Though there is no predetermined number of stocks considered optimal for a portfolio, SIM prefers to limit individual holdings to no less than 1% and no more than 10% at the time of purchase.

As previously mentioned, fixed income investments are selected to serve two functions: to hedge against uncertain markets and to provide income. Though capital gains can be achieved, the trading of fixed income investments is limited. Instead, a more conservative approach will be taken, keeping the portfolio's average term to maturity in the 4-7 year range.

Site Design and Hosting by BEARSHARK
© Stodgell Investment Management