Investment Philosophy

At Shoreline Financial Advisors, we employ an evidence-based investment philosophy. In other words, we are service oriented, not sales driven.

We Don’t –

  • Invest in the latest trends.
  • Concentrate portfolios in a few “great ideas.”
  • Trade frequently looking for the next big growth story.
  • Accept sales commissions or third-party payments.
  • Accept incentives or bonuses to back up certain investment products.

We Do –

  • Decrease costs by minimizing trading.
  • Reduce expenses by finding the lowest cost investment vehicles that are most useful.
  • Increase the chances of good performance thereby investing in strategies and premiums that have been researched over long periods of time (see below).
  • Believe in putting you first.

Our investment philosophy is governed by systematic, evidence-based dimensions of expected return.  These systems are robust, cost-effective, sensible, and durable across geographic markets.

Historical Observations of Five-Year Premiums - Investment Philosophy

This chart documents the relative five-year annualized performance of returns. These are attributable to premiums in U.S. equity markets.

The blue bars stand for five-year periods in which U.S. equity markets, U.S. small cap stocks , value stocks , and high profitability stocks were positive, compared to treasury bills , large cap stocks , growth stocks, and low profitability stocks respectively.  Consider for example, the first red bar in the top row of the above graph. This bar shows the annualized performance difference between the U.S. market and one-month U.S. Treasury bills form 1928 to 1932 (i.e., market premium).  During the five-year period, the annualized return for U.S. equities was less than that of one-month Treasury bills which is shown by the red color (or negative premium).

Despite the higher frequency of positive premiums, outperformance may not be consistent, even over longer periods of time. Long-term investors should consider that premiums are never guaranteed and consequently can undergo periods of negative returns in both relative and absolute terms.

Dimensions of Expected Returns

This chart demonstrates proof that the size, relative price, and profitability have been persistent across time and universal across markets. Each premium has appeared over many decades in the U.S. market.  Looking beyond the U.S. markets (i.e., out of sample), these premiums have also appeared in developed ex U.S. and emerging markets.

The data provides evidence that this approach makes sense, offering greater confidence that the premiums will persists in future time periods.

We are happy to meet with you to discuss your finances and your hopes for the future. It’s important to find a team of advisors that you can trust.

Feel free to call us at (203) 458-6800.

If you would like to reach us by email, please Click Here to set up a meeting. No pressure. No obligation.