Investment Ideas You Won't Get From Us

It might pay to ‘listen’ to the advice we don’t give.

When asked to explain our investment philosophy, I cite just three points:

  • Extensive, global diversification
  • A long-term perspective
  • Strategic rebalancing

We typically recommend that our clients own a portfolio containing 18 asset classes and market sectors, featuring 6,000 or more securities from as many as 40 countries. This means a global mix of stocks, bonds, commodities, real estate, foreign securities, natural resources, precious metals and more, with the right proportion of each based on each client’s situation. We then recommend that the client maintain this portfolio for years, even decades, instead of frequently buying and selling based on the latest news headline. And because changing market values will cause the portfolio’s allocation to drift, we rebalance each client’s portfolio as needed to keep it consistent with our design.

That’s it. That’s how we manage $12 billion in assets for our clients. Academic studies have proven time and again that this approach is effective.

But just as important is the advice we don’t give! Here are 13 investment products and strategies you won’t hear us recommending:

  • Variable life insurance policies
  • Non-traded real estate investment trusts
  • Hedge funds
  • Commodities trading
  • Options and futures trading
  • Derivatives
  • PIPES (private investments in public equity)
  • Alternatives
  • Viatical settlements (buying insurance on someone else’s life and waiting for the person to die)
  • Master limited partnerships investing in oil and gas
  • Fixed annuities
  • Equity-indexed annuities
  • Lottery tickets
  • Actively managed funds
  • Retail mutual funds

These are just a few of the products we don’t encourage. If you encounter others and wonder what we think about them, call and ask us — before you invest.

Originally published in Inside Personal Finance January 2014

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