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We follow the Uniform Prudent Investor Act (UPIA)

There are only two investment philosophies
The first is that free markets fail, while the second is that free markets work. It is important for all people to understand what each means, choose one and align themselves with an advisor who shares the same belief. We believe that free markets work. What this means is that all the knowable and predictable information is already factored into the price of a stock. Based on supply and demand, the free market is the best determinant of market prices. In other words, it is breaking news, unknowable information, or unforeseen events that changes the price of a stock. The randomness of the market makes it impossible for any individual, entity, or software program to consistently predict market movements and capture additional returns unrelated to risk.

We follow the Uniform Prudent Investor Act (UPIA). UPIA is a legal document that was published by the American Law Institute in 1992, that outlines what it means to be a prudent fiduciary. The UPIA provides for a duty to diversify investments which can be done by utilizing a concept called Modern Portfolio Theory.

In 1990, Harry Markowitz, Ph.D., won a Nobel Prize for his concept called Modern Portfolio Theory. Modern Portfolio Theory is a scientific way to build a portfolio that can identify and measure the amount of volatility for any given level of expected return. So what does that fancy language mean?

Instead of talking about risk in a general way, you can measure the volatility in a portfolio (with a scientific number) and actually determine how relatively volatile the portfolio is.

You can also look at historic rates of return for every capital market and gain some insight into how various capital markets perform historically. (You can get an actual measurement of expected risk versus expected return!)

UPIA states that the fiduciary’s role is to manage risk and expected return by developing and monitoring the trust portfolios. Modern Portfolio Theory is the idea that you should diversify, measure risk, and account for all costs. Not only are these your primary responsibilities as a fiduciary, but the great news is that there is an academic and scientific method, if applied appropriately, that can give you very good solutions and prudent reasons for making an investment decision.

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