Professional Portfolio Management Riveks Investments believes portfolio management is far more than just buying stocks and bonds and hoping they do well. We use a tested “top-down” investment approach combined with personalized planning to build a portfolio tailored to your long-term financial goals. Riveks Investments’ Investing Approach We want to improve the financial well-being of our clients—beyond just recommending an investment strategy. We stay in touch as your needs evolve and market conditions shift. We help you meet your longer-term goals with an investment strategy that’s specifically designed for you. And we’re transparent about the investing decisions we make for you because we believe an informed investor is a better investor—and a happier client. Our Investment Philosophy Our investment philosophy is rooted in the firm belief capitalism is the best possible economic structure in this imperfect world. Individuals acting of their own interest in search of profits are forces that ultimately better all. Markets are a manifestation of this—and a means to participate and financially benefit. Wall Street’s “Wisdom” Frequently Isn’t Very Wise No one has ever gotten ahead by following the herd. We believe many of the old adages dominating Wall Street’s groupthink are actually false. Yet they’ve become generally accepted, and many of today’s investors and professionals haven’t challenged them. We challenge accepted wisdom by questioning and analyzing it rigorously. Analysis trumps the “we all know” generalizations. Supply and Demand Determine All Prices—Including Stocks and Bonds Like anything traded in a market economy, stock prices are driven by supply and demand. Demand factors reign in the near term. They can wiggle for any reason—sentiment, political factors or fundamentals. Longer term, though, supply factors dominate. Rising supply, in the form of initial public offerings (IPOs), secondary offerings and stock-for-stock mergers often produce headwinds for markets. But supply can shrink as well! Share buybacks and cash mergers reduce it—typically a bullish factor in our view. Asset Allocation Is Critical, Yet Too Many Investors Err When Selecting Theirs We believe asset allocation—how much to invest in stocks, bonds or other securities—is the most impactful determinant of portfolio returns, and an investor’s asset mix should depend on their goals, objectives and time horizon. Yet many folks approach this critical decision incorrectly resulting in a suboptimal portfolio for their situation. Many improperly assess their own time horizon—a huge problem. Investors also lack discipline and tend to base their allocations on how they feel. This can lead to chasing a hot investment or style, investing too conservatively or having no defined process to underpin this crucial factor. Market Cycles Can Be Forecast, Their Short-Term Wiggles Cannot While we don’t believe consistently timing daily, weekly or monthly market moves is possible, we do believe cyclical changes are foreseeable. Often, such changes are driven by events the vast majority of investors either overlook or interpret incorrectly: disconnects between fundamental reality and the investing public’s perception of reality. Successful forecasting requires assessing both. Stocks are forward-looking, yet most investors’ feelings are heavily influenced by the recent past. Bull markets tend to begin during recessions—when people feel most bleak—and end during euphoric “booms.” No Investment Is Permanently Superior Different categories of securities outperform at different times. For example, smaller stocks sometimes outperform larger (and vice versa), foreign and domestic trade off leadership, and dividend-paying stocks sometimes outperform non-dividend paying. No style or class of security is permanently superior—leadership rotates irregularly. Outperformance trends typically last over a foreseeable timeframe, providing opportunities for investors to capitalize. Our view stands in contrast with other firms who argue the inherent superiority of a certain size, style or type of security. If that were true, wouldn’t all investors simply flock to the superior stocks, driving prices higher than fundamentals warrant? Global Diversification Is Preferable Finance theory holds that correctly constructed stock indexes will have very similar returns over long timeframes. But the journey to this destination differs: The narrower the index, the rockier the trip, while a broader approach helps smooth the journey. A global approach is more diversified than a country-specific one. Moreover, a global approach accounts for performance rotation. No nation’s or region’s companies are inherently superior. Leadership rotates—frequently. We believe a global approach increases your opportunities to outperform and can mitigate country-specific risk factors, like political or legislative risks. To Beat Equity Indexes, You Must Look Beyond the News Have you seen how fast stocks move when earnings reports are released? Or when mergers are announced? It’s near instantaneous. Markets are incredibly efficient at pricing in widely-known information. Getting an edge over the market requires seeing the world differently and more correctly than the crowd. If major financial media is reporting it, it’s already reflected in market prices by the time it reaches you—and everyone else. We (and You) Might Be Wrong This is all about checking your emotions and managing risk. No matter how much research we do, it’s possible we might be wrong, so we avoid making outsized bets with our clients’ assets. If a sector is 10% of your selected benchmark, allocating 50% to that sector is too much risk, in our view. Smaller overweights allow us to maintain exposure to all sectors, reducing the opportunity cost if markets surprise us.