SRC manages individualized portfolios for clients based upon their personal objectives, goals and risk tolerances. When constructing a portfolio, managers take into account a client’s future income requirements, age and present financial circumstances. Imperatives for income and safety of principal are balanced with the need for inflation protection and willingness or ability to assume risk in order to facilitate future growth. An intended investment approach and portfolio construction result from this synthesis of requirements. We do not define our goal as “beating the market” but as striving to meet each client’s objectives.
We try to avoid market fads and the emotional buying and selling that characterize periods of extreme valuations.
Depending on the investment objectives and risk tolerance of the client, a portfolio may include common stocks, bonds and cash equivalents, and, less frequently, preferred stocks, open and closed end funds or exchange traded funds representing a basket of equities or fixed income securities. In some cases a portfolio manager might utilize exchange-listed options intended to enhance the rate of return or reduce some risk. Within a given asset class, Portfolio Managers employ a variety of traditional valuation techniques designed to signal when a security is advantageously priced and offers potential for price appreciation. Such indicators include, but are not limited to: price to earnings comparisons, price to sales comparisons, expected growth rates, historical valuations, leverage ratios, price to book value and cash flow analyses, as well as considerations regarding company management and style. SRC’s investment horizon is normally long term so its perspective in valuing a potential investment incorporates a multi-year assessment of the security’s likely performance relative to peers and to the general market.
SRC attempts to mitigate the risks posed by individual securities by either holding a mix of securities in different asset classes, such as stocks, bonds and cash, or by balancing a predominantly equity portfolio with cash to offset market declines. We have found this approach to be effective in reducing downside risk in the severe market declines that have occurred in recent years.