Investment Management

Porter, White & Company approaches investment management as an applied science. Modern finance is based on the scientific method and embodies theories, models and principles that have been verified through empirical tests and peer review by the community of social scientists who specialize in the field of finance. As financil engineers, we apply the science of investing on behalf of our clients.

One of the characteristics of science is that scientific truths are always subject to scrutiny and revision or rejection. Thus, Newtonian physics has given way to the General Theory of Relativity and Quantum Mechanics, which in turn may be replaced by so-called "string theory." We stay up to date on the latest research in finance and apply current knowledge in our practice.

We adhere to the following guiding principles.

  • Risk and Return are Related. Markets are relatively efficient; to achieve higher returns, one must take more risk.
  • Risk as a Focus. Choice of investments should be based on ability to bear risk through good markets and bad, not just on desired return. Spending policy, time horizon and liquidity needs drive decisions.
  • Asset Allocation. Selection of asset classes (such as treasury bills, small cap stocks, value stocks, etc.) is the most important determinant of performance. Market timing and security selection seldom lead to superior risk adjusted returns.
  • Asset Diversification. Markets only compensate for risk that cannot be diversified so investments should include a range of fixed income, domestic and international equity securities and diversification within each asset class.
  • Costs Hurt Performance. Trading costs, fees paid to active managers, market impact costs, taxes and other expenses substantially undercut investment performance.
  • Comprehensive Investment Policies. Every investor needs a plan to follow which should be reviewed annually and revised as circumstances change. The plan should identify and take into account expected income, required distributions for consumption, and individual risk preferences.
  • Performance Reports. You cannot manage what you do not measure, and brokerage or custody account statements usually provide insufficient performance information. PW&Co delivers performance reports using industry standard methods and tax lot accounting as a means of monitoring investment portfolios.