Investing in a Good Night’s Sleep

B&C prides itself on being a preservation of capital money manager and managing money in a way that allows our clients to sleep at night. When the world seems too chaotic and unsettling, most people want to know that they—and their portfolios—are in good hands. We accomplish this goal by building a diversified portfolio tailored to your individual needs and goals.

As a preservation of capital money manager, we preserve assets by limiting downside risk. Preservation of capital money management is not investing to avoid risk; we still invest in the stock market, which can at times be volatile. We employ asset allocation, diversification, and rebalancing strategies to keep clients’ risk in line with their needs. The combination of bonds and stocks helps us take advantage of volatility.  Volatility can be scary for individuals attempting to navigate these waters by themselves, which can lead to panic selling. Typically, this happens when stock prices are declining. Remember: buy low, sell high. So, how do we take care of our clients along the way?

First, no one at our firm sells any type of financial product. All decisions about our model and which stocks and bonds to invest in are decisions made in-house by our investment committee, which includes those on our team directly responsible for implementing and managing clients’ investment portfolios. We invest in solid companies that often pay a good dividend and are more well-known names, such as Johnson & Johnson or Microsoft. These companies have a good track record and strong balance sheets. They have navigated recessions and stock market declines and continued to generate profits for their shareholders.

Second, we review every individual stock account every 60 days. We pride ourselves on giving our clients financial discipline. This means we rebalance your account to make sure we are taking gains as the market goes up. The opposite is also true: when the market corrects (as it does 30% of the time), we rebalance and add to the stock allocation. This constant review process allows us to not give back profits when we take gains and reallocate into the safe side of your portfolio—bonds.

The third way we take care of clients is the bond side of the portfolio. Given the current interest rate and inflation environment, bonds and interest rates are on everyone’s mind. Interest rates are inversely correlated to bond prices. That is, as interest rates decrease, bond prices go up, and vice versa. This type of risk is called interest rate risk. A way we combat interest rate risk is with a laddered bond approach. We mainly hold bonds until maturity, so as bond prices fluctuate, clients are still getting paid the interest and the par value at maturity. Having a laddered approach means we have bonds maturing regularly in each year, which allows us to use the funds to fund clients’ cash needs or rebalance their portfolios throughout the year. We can capitalize on the higher interest rates as the environment changes or preserve capital for the cash needs of our clients.

As fiduciaries to our clients, B&C is here to educate on how we manage money and put our clients’ minds at ease knowing we are taking care of them in all market environments. Our clients’ best interests are our priority when investing their hard-earned money. We are here to preserve capital and get a competitive rate of return. This management style has helped our clients for over 25 years to have a good night’s sleep. We are proud of our ability to navigate good and bad markets and encourage all of our clients to reach out to us if they would like to understand more about our management style.

The information presented in this article is for educational purposes only and is not meant to provide individual advice to the reader. There is no guarantee the information provided above relates to your personal situation. All financial situations are unique and should be advised as such.

Author

Jessica Schmidt