Our Proprietary Investment Strategy

“Sleeves” and the Broad View of the Marketplace

We start with a very broad view of the marketplace, and divide the market into “sleeves” (a common word used in the financial industry). It’s used to segment the market into different markets that have different rhythms, though these different sectors still touch and influence each other. For example, stocks (equities) have their own rhythms. Bonds have a rhythm, and there is a relationship between the rhythms of stocks and bonds. The foreign currency market, which is the largest market, has it’s own rhythm. The broad, real estate investment market is another example.

Sometimes these rhythms move together, different sleeves going up or down at the same time. Sometimes one is performing well while another is not. Ideally, they would perform entirely independent of each other. This is diversification.

Our Approach To Investing

The primary approach is to have a wide diversification. This doesn’t mean simply mutual funds of different names that buy the same things, but rather funds holding investments that cover very different marketplaces.

Financial Planning, Financial Advisor, Retirement Planning, Carlsbad, San DiegoThen, within each of these “sleeves”, or marketplaces, you can find the sub-marketplaces to fine-tune your strategy. For example, in the stock market you might hold dividend paying companies, companies in emerging markets, companies that invest in national infrastructure, or consumer staples companies. We call these sub-components, or sub-markets, the “arms” inside the sleeves.

By blending the different arms within the sleeves we are able to create a comprehensive portfolio encompassing not only that one market, such as equities, but all the little sub-markets within it.

Investing in this way brings wide diversification which can protect your investments when segments of the market are running off in one direction or another. It also allows us on the reporting side to clearly understand what is driving investment performance.

Customization for Each Client

Each solution is custom-tailored to an individual client’s strategy and plan. However, there are economies of scale in the research of a particular arm. The amounts, the proportions, what accounts the investments are purchased from, etc., are all very specific to each individual client.

Investment Strategy, Financial Planning, Financial Advisor, Retirement Planning, Carlsbad, San DiegoDo You “Time the Markets”

We never try to time the markets. A great deal of research has shown how difficult it is to time the markets with any success, especially in turbulent and volatile markets. Research has proven the opposite: that the emotional-reaction driven approach to jumping in and out of the market and/or sectors of the market more often produces the opposite of the desired effect. For example, instead of buying low and selling high, one ends up buying high and selling low.

The best solution is to diversify your portfolio while having exposure to multiple markets and sub-markets. Decisions of when to get in and when to get out are always difficult. The key is to take a long-term approach, to make regular contributions when possible, and to rebalance regularly so that the investment strategy that grew from the financial plan is followed correctly.

Individual Investments Versus Well-Managed  Funds

Individual company investments carry individual risk. If you buy a particular mining company, for example, they might have a fire in their mine. They may have looked ideal when the investment was made, but due to the risks associated with this one individual company, the investment may not work out well.

Financial Planning, Financial Advisor, Retirement Planning, Carlsbad, San DiegoIndividual company picking is not what we do. However, we leave that responsibility to highly specialized investment managers. Think of this as the mutual funds. The best funds have highly skilled and experienced managers and it’s their job to analyze individual companies that comprise the fund’s holdings.

An important distinction to know is that fund managers aren’t free to invest in whatever company they like. They are under the directive of the fund prospectus, which will have it’s stated focus, such as emerging global markets, for example. In that case the fund manager’s choices are restricted to the top performing companies in the emerging global market sector.

We use diversification across funds to help shield us from individual company risk and we use professional investment managers, with their teams of analysts, to manage individual company investments.

Do You Have Important


Accept our offer of a free
Financial Planning Checkup

Related Articles

Our Approach to Financial Planning
Our Three-Step Process for New Clients
Our Four-Step Planning and Investment Process
The Benefits of Frank Financial Advisors
Our Investment Philosophy

About the Author
Todd Frank, President & CEO, Frank Financial Advisors in San DiegoTodd E. Frank, CPA/PFS, MBA is the President and CEO of Frank Financial Advisors, a Registered Investment Advisory Firm (RIA) serving clients nationwide from our headquarters in Carlsbad, San Diego, California. As an RIA, Frank Financial Advisors is able to offer truly independent, fee-only financial advisory services.