Solutions for intelligent Wealth Creation and Management Solutions for intelligent Wealth Creation and Management
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Investment Advisor

  We generated total positive returns for existing long term clients who followed our advice during the time period August 29, 2008 and ending October 15, 2009.1



  We believe “time in the market, not market timing.” That’s why we concentrate our efforts on long term investors interested in achieving their financial goals. We are a Fee Only Non-Discretionary Investment Advisory Firm that researches and recommends premier mutual funds, exchange traded funds (ETF’s), and other investment products to our clients.

Our investment universe consists of approximately 300 of the highest rated mutual funds, ETF’s, and other investments, which we carefully monitor, and recommend only from the top 10%. Our universe is not restricted to an individual company, profit target, or investment style; which allows us to recommend to you the highest risk adjusted return products on the planet.

Fee only means we only receive compensation from you, our client. Many competitors accept commissions and other fees by recommending specific investment products. Others are directed by management to sell the most profitable investment products. Some advisors limit their product offerings to one company and hold you hostage to second rate products. We align our interest with yours and simply recommend investment products with the highest risk adjusted rate of return.

A Non-Discretionary Investment Advisor will only execute investment transactions with your acceptance and approval…no nasty surprises resulting from a faulty model or a rogue trader. We seek to educate you at every opportunity and increase your knowledge of investing so you will feel more comfortable with our investment recommendations.

We are value investors who like to buy low and sell high. Or, as Warren Buffet once said, “be greedy when others are fearful and fearful when others are greedy.” This concept sounds like something a first grader would understand, but it is extremely difficult for investors to apply in practice.

1 Past performance does not guarantee future results.



We are a risk averse investment advisor who dislikes losing money. Our objective is to achieve a total return on investments commensurate with your stated risk level. We do not favor a high yield or capital gains strategy, but rather seek to achieve an absolute total return based on your stated risk tolerance. This is also known as your risk adjusted rate of return.

Will Rogers once said, “I'm not as concerned about the return on my money as I am the return of my money.” To minimize this particular risk we would recommend that you receive a monthly statement from your outside custodian. The custodian is the entity that actually holds your investment assets. Following this simple rule would have saved thousands of investors billions of dollars lost as a result of a massive Ponzi scheme by investment advisor Bernard Madoff. Our custodian is TD Ameritrade Institutional, and they send monthly statements to all our clients.

In addition to your risk tolerance, required rate of return, and investment assets we will also consider your time horizon. As you may already know, a young person in their twenties has a longer time horizon than someone nearing retirement or retired. This means a young person has time to recover from a bear market, such as the recent down market attributed to the housing bubble. Conversely, an investor nearing retirement or retired should lower their risk profile to protect against loss of principal due to adverse market conditions.

Your asset allocation is another very important factor in determining your investment portfolio’s performance. We will custom build your portfolio with core holdings including equity, fixed income, and cash funds. In addition, we will combine a smaller slice of other investments based on our knowledge and assessments of the economy and global financial issues. These investments include blue chip and smaller capitalization stocks, taxable and municipal bonds, US and foreign based investments, commodities, treasury inflations protected securities (TIPS), hedges (not hedge funds), real estate, and other investments.

Finally, based on the above information, we will prepare you an Investment Policy Statement summarizing total investment assets, time horizon, rate of return, risk tolerance, and asset allocation. This document will serve as formal documentation of your investment plan and will keep us on course no matter what mood the market is in. We commonly refer to our custom built portfolios as “all weather portfolios.” Our Investment Portfolios are constructed to withstand every type of market environment and therefore we seldom recommend making changes more often than annually.



After your initial portfolio is established, we continuously monitor your portfolio and advise you if any changes are necessary before our next scheduled annual review and rebalance. For instance, if interest rates were to rise unexpectedly we would advise you to shorten maturity length to reduce the risk of loss of investment capital for fixed income investments. As you may already know, when interest rates rise the value of your fixed income investments decline and you lose money. This may be a real possibility due to our country’s precarious financial condition and other economic and political factors. In addition, we will prepare a quarterly performance report for your review. Our report will also contain an analysis of the quarter’s significant economic, financial, and political events that influenced market behavior.

We have been recommending investments to clients since we started this business in 1998, and have experienced several bear markets in that time: the worst of it during August 29, 2008 and ending October 15, 2009. But, we are happy to report that we generated total positive returns for existing long term clients who followed our advice during that terrible time. In fact, in early September 2008 we contacted all investment advisory clients and recommended no portfolio changes other than our annual review.

We perform our annual review and rebalance service after twelve months of investment returns. The theory behind this procedure is to harvest gains from your winning categories and reinvest the proceeds in the underperforming categories. This is critical. Based on the economic cycle, every category will be ready for harvest at a different time. For example, suppose at the end of 1999 the technology portion of your portfolio had significantly outperformed the balance of your portfolio. At our meeting I would strongly recommend that we sell your tech position back to the level of twelve months earlier and purchase underperforming categories such as consumer defensive, healthcare, and utilities. This procedure forces us to apply the theory of “buy low and sell high.” The result of annually harvesting your winners is to increase your absolute total long term risk adjusted rate of return. Again, a simple piece of advice would have saved millions of investors billions of dollars.

We will also review each existing investment and compare it to the appropriate category in our investment universe. As you may recall, our investment universe contains 300 of the best investments on the planet. As we review and compare each investment, we will evaluate it based on over 25 critical data points that will be discussed in detail for each existing and proposed investment. We may suggest one or two changes to your investment portfolio based on the above analysis. This allows us to upgrade your investments so you only own the best of the best. We also update your Investment Policy Statement, Asset Allocation Worksheet, and Investments Schedule.

Capital Management Resources, LLC
1620 Bay Street
Port Orchard, WA 98366
(360) 876-7743 ph. (360) 876-9460 fx.