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Portfolio Theory

We provide low-cost ETF portfolios for long-term investors. All our portfolios have a few things in common.

  • Diversification. Global diversification can improve performance and control risk.
  • Objectivity. Clients’ interests come first. We avoid conflicts of interest. No proprietary products.
  • Balance. We balance our understanding of history and research with real-world experience.
  • Elegant Simplicity. Leonardo Da Vinci said, “Simplicity is the ultimate sophistication.”
  • Low Cost. Controlling costs and expenses allows clients to keep more of what they earn.
  • Discipline. Our well-defined process allows us to better navigate both good and bad markets.
  • Patience. Success in investing takes time. We are willing to wait for our ideas to bear fruit.

The stock market, the media, and popular culture, by and large, encourage behavior consistent with the belief that the market is inefficient. You must understand that there is a choice to be made about how you believe the market works.

We believe that markets are efficient, so much so that it is one of our Core Values.

Modern Portfolio Theory

A solid component of Free Market Portfolio Theory is Modern Portfolio Theory (MPT), which earned the Nobel Prize in Economics in 1990 for the collaborative work of Harry Markowitz, Merton Miller and William Sharpe.

Essentially, MPT demonstrates that for the same amount of risk, diversification can increase returns. The task is to find assets with an academically proven risk premium and low correlations.

Source: Malkiel, Burton. “A Random Walk Down Wall Street”. 1973
Fama, Eugene; French, Kenneth. “The Cross-Section of Expected Stock Returns”. Journal of Finance, 1992

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