Investment Management

Our Investment Approach

“We strive to capture the returns available during favorable market conditions, while limiting losses during volatile times.”

Most financial advisors simply aim to match market returns.  When the market is going up, everything looks great.  It’s when we go through the inevitable down cycle that this model breaks down.  We saw that during the dot com era in 2001-2002 and again during the financial meltdown in 2008-2009.

So if your advisor is like most, you’ll make gains when the market goes up, but you’re likely going to be stuck holding losing positions through the down cycles.

When you’re young, you’ve got the luxury of time to make up financial ground.  But when you’re approaching retirement, or already there, this approach can create stress and financial discomfort at the worst possible time.  We saw that in 2008, when many had to put retirement plans on hold and/or endure stressful times.

At Pacific Investment Research, we offer a better alternative for those approaching retirement or retired.  Instead of just following the market up and down, we perform active portfolio management so your money can continue to work for you no matter what the markets are doing.


Active Portfolio Management

Active portfolio management seeks to take advantage of stable or rising asset prices when markets are performing favorably, but also protect against market declines.

Since most financial advisors lack the expertise to actively manage risk during market down trends, they don’t offer this type of service.  Usually, they take a “broadly diversified asset allocation” approach, hoping that diversification will automatically protect your portfolio when markets decline.

There are two problems with that approach.

  • Potential large losses:  You may end up with more risk than you bargained for.  Diversification does not always work well as we have seen during the financial crisis of 2008-2009 when nearly all asset classes declined as investors moved heavily into cash.
  • Mediocre performance:  Lower investment returns from allocating funds to safer assets such as high quality bonds will drag down the overall average investment return of your portfolio over time.

At Pacific Investment Research, we have been providing active portfolio management to investors for over 15 years.  During the bear market which spanned from late 2007 to early 2009, we dramatically reduced our client portfolios’ market exposure in stocks and bonds, and nearly all of our clients fully recovered their portfolio losses by late 2009 or early 2010, 3-4 years sooner than most “buy and hold” investors.


Direct Money Management

Money management is the daily activity of selecting and monitoring the stocks, bonds, and other securities in your portfolio.

Most financial advisors will provide you with basic investment planning and general portfolio oversight, but outsource this day-to-day management of your money to mutual funds, ETFs, or other separate account managers.

However, at Pacific Investment Research, we take advantage of our own in-house expertise, performing hands-on money management for client portfolios.  We manage our own proprietary time-tested investment strategies in several asset categories:

  • High Income Bond
  • Multi Sector Bond
  • Tax Smart Bond
  • Low Volatility Stock
  • High Dividend Paying Stock
  • Large Cap Growth Stock
  • Mid Cap Stock
  • Small Cap Stock
  • Global Stock etc…

For each asset category, we offer a “core” and “tactical” variation of each investment strategy.

Our core investment strategies stay near fully invested throughout market cycles, while our tactical strategies are designed to fully participate in rising markets, but reduce market exposure and limit losses during market declines.

Also, several of our core and tactical investment strategies are designed to be tax efficient, taking advantage of favorable tax treatment for longer holding periods.


Designing and Managing Your Custom Portfolio

First we want to learn about your prior investing experience and understand your personal views about investing.

Second, using a holistic approach that takes all of your existing assets into consideration and how they are titled (i.e. for tax purposes), we will work together to develop an asset allocation strategy.

Third, based on your investment goals and preferences for traditional and/or active management, together we will determine what investment strategies to use in your portfolio.

Taking advantage of our own in-house experience and expertise to actively manage your money, on a daily basis we:

  • Select and monitor individual stocks, bonds, and other holdings in the various investment strategies in your portfolio.
  • Monitor various stock, bond, currency, and commodity trends as well as a variety of market and economic indicators.
  • Respond to changing market conditions and as our indicators dictate, increase or decrease your market exposure (in our tactical investment strategies).


What does all this mean for you?

Here’s how our investment approach can benefit you:

  • Invest for higher returns – You can confidently allocate a larger portion of your portfolio to stocks or high yield bonds, knowing that we are carefully managing downside risk.
  • Limit Losses During Bear Markets – You can be assured that losses will be limited.  Our active investment strategies are designed to systematically reduce market exposure during market declines.
  • Profit From Volatility – Instead of the usual buy-and-hold approach, we strive to take advantage of market volatility, up or down, to enhance your returns.
  • Tax Smart – Your investments are designed to be tax savvy.  We organize and manage your portfolio to be tax efficient while retaining our ability to manage the downside market risk of your portfolio.
  • Cost-Effective – As true money managers, we often eliminate a layer of fees associated with mutual funds, exchange traded funds, or third party money managers.



Tailored Investing for You

Together we will construct a risk controlled portfolio and apply hands-on direct money management to achieve your goals.

Worried about outliving your retirement portfolio

Schedule your complimentary financial review today.