Our Philosophy
Compass Financial Strategies offers institutional-grade portfolio management to individual investors and institutions. Compass helps serious investors navigate the unpredictable world of investing.
We believe:
- markets are efficient,
- risk and return are related, and
- asset allocation drives returns – not security selection.
The hypothesis states:
- Current prices incorporate all available information and expectations.
- Current prices are the best approximation of intrinsic value.
- Price changes are due to unforeseen events.
- Mispricings do occur, but not in predictable patterns that can lead to consistent outperformance.
The implications:
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Active management strategies cannot consistently add value through security selection and market timing.
- Passive investment strategies reward investors with capital market returns.
In this new model of investing, our state-of-the-art portfolios are based on five governing principles:
World markets are random and unpredictable; therefore, diversification is important for investors in the world market. The familiar axiom “don’t put all your eggs in one basket” certainly applies here.
- The U.S. economy represents approximately 44 percent.
- International developed markets represent approximately 22 percent.
- Emerging markets represent approximately 22 percent.
- Frontier markets represent approximately 12 percent.
Asset allocation pertains to owning a portfolio that includes debt and ownership.