Principles of Investing
Act as a fiduciary
As fee-only fiduciary advisors, we have chosen to put our client’s interest first. It is more than a legal standard – it is how we think clients should be treated.
With index-like investing, you receive efficient low-cost alternatives that attempts to keep costs low and minimize taxes.
Goals-based Asset Allocation
Your investment portfolio should be integrated with your financial plan. Your investment portfolio is tied to a variety of your goals, including your cash flow needs in retirement.
You receive a globally diversified portfolio that tilts allocations towards favorable “factors” in the market. As we leverage Dimensional Fund Advisors and do not chase fads, you benefit from research that focuses on elements that are sensible, persistent, and robust.
You receive robust reporting and access to view your accounts and asset allocation from any device. Technology coupled with credentialed, experienced advisors leads to customized advice while maintaining low costs.
Education and Behavioral Coaching
We value our role as teacher so that you will have confidence in the long-term strategy. To avoid the mistakes that so many do-it-yourselfers make during market volatility, you receive coaching along the journey.
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Mel Bond, CFA - Quotes & Philosophy
We seek to add value by building portfolios that target higher expected returns in a cost-effective manner – Dimensional Fund Advisors
We focus on what we can control – costs, dimensions of returns, and taxes when possible – Mel Bond
As much as I like the science of investing and working with client’s portfolios, I realize that it’s the client’s goals, their family, and the related financial issues that really matter to our clients – Mel Bond
October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February - Mark Twain
Our investment philosophy is influenced by the work of Dimensional Fund Advisors (DFA) which takes a research-based approach to investing and taps into the power of the markets and market participants. We have access to funds from Dimensional Fund Advisors which uses academic research and common sense fund management to create low-cost, index-like mutual funds. Their funds offer broad diversification with exposure to factors of return that are:
- Sensible (easy to understand),
- Persistant (occur over long historical periods),
- Pervasive (occur in many markets),
- Robust (worth pursuing), and
- Cost-effective (exposure to the factor is not expensive).
These factors include Market (stocks tend to outperform bonds), Company Size (small companies tend to outperform large companies), Relative Price (value stocks tend to outperform growth stocks), and Profitability (companies with high profitability tend to outperform those with low profitability). Oasis Wealth Planning also uses investment vehicles from other fund advisors as well as individual bonds and stocks where it makes sense for you.
A pure index portfolio is low-cost but often contains allocation concentrations which reflect the biases of the investor and, usually, are not personalized to a client's specific needs. Some investors and their financial advisors seek outperformance by looking for funds, stocks and sectors that have a good story. Too often, this approach is ineffective from a cost, tax, and results standpoint. At Oasis Wealth Planning, we base your portfolio on rigorous academic research and professional portfolio management practices. Our process is designed to reduce behavioral biases, keep costs low, and give you the opportunity to experience potential outperformance in the long-term.
Stocks outperform other asset classes in the long-term. For investors to realize the gains of owning stocks, they must structure their portfolio so that they are not forced to sell stocks during a correction or bear market. To minimize the likelihood of selling equities at the wrong time, we align your short- and intermediate-term cash flow needs with a bond ladder-type portfolio (the "Matched Portfolio"). To increase the likelihood that your equities will perform as required, we select a mix of funds (the "Growth Portfolio") that are exposed to long-term growth factors with reduced downside characteristics.
Traditional portfolio construction methods are asset-based and seek to reduce the annual volatility of the portfolio so that the investor will be less inclined to 'jump ship' by selling stocks when the market is down. At Oasis Wealth Planning, we meet regularly with you to help keep your focus on your long-term goals. We build your Matched Portfolio to provide stable values during a downturn, giving your Growth Portfolio time to recover and grow for the long-term.
Diversification across securities, asset classes, sectors, and countries is a core principle of successful portfolios. Full diversification may help minimize the extreme price swings of individual asset classes, sectors and countries.
Investing in the world market opens up more investment choices and could provide better longer-term performance and could minimize volatility. Nearly half of the investment opportunities are outside of the U.S. While there is a tendency for investors to have a home bias by preferring investments in one’s home country, investors should be aware of the non-U.S. results. In the 11 decades since 1900, non-U.S. markets have actually outperformed the U.S. market in six of those decades. (Source: Annual country index return data from the Dimson-Marsh-Staunton (DMS) Global Returns Data, provided by Morningstar, Inc.).
Just as it is difficult to pick stocks that will outperform in the short-term stock winners, predicting which countries will be near-term winners can be nearly impossible. Our goal of diversification across countries can help a portfolio provide more consistent returns and higher long-term results.
We begin by identifying and measuring your goals via our financial planning process. For every year from today through the end of their plan (beyond their life expectancy), we estimate your annual cash flow surplus or need. Before retirement, the surplus will be invested in the asset classes and investment vehicles appropriate for your goals.
As retirement nears, your annual cash flow needs become more definite. We build the Matched Portfolio of bonds and bond funds in amounts which match your annual cash flow needs. By owning investment-grade bonds held to maturity, we seek to minimize your exposure to rising interest rates, own high-quality assets for your near-term needs, and remove your dependence on stocks for the time period covered by the Matched Portfolio.
The traditional portfolio construction process creates an asset-based allocation which includes asset classes and subclasses that have lower annual correlation to stock market returns, so that the expected performance of the portfolio is more stable. The math behind these methods is based on annual statistics.
Of course, your goals do not all come to fruition in one year. Most of your goals last for your lifetime. A portfolio built to reduce annual volatility is probably not the same portfolio that will give you best chance at success for goals that are 10 or more years away. Our portfolio construction process assigns specific assets to each year's cash flow needs and then combines those assets to reach your overall allocation.
While we keep our focus on your long-term goals, life is not static. Your goals may adjust, tax laws change, interest rates rise and fall, economies transform, and markets move.
We adjust your financial plan regularly and adjust your portfolio based on those changes. Rebalancing is one of the two 'free lunches' in investing (diversification is the other). When we rebalance, we sell the investments that have outperformed and buy those that have lagged behind. This forces us to "buy low, sell high," which is how you make money.
Rebalancing also helps reduce the role biases and emotions play in managing portfolios. We make buy and sell decisions based on our principles and process, not on headlines, stories or feelings.
A Foundation Built on Great Ideas
A Foundation Built on Great Ideas
Employee Stories: Costs Matter
Perspectives on Market Volatility
Oasis Wealth has chosen TD Ameritrade ("TDA") to be the trusted custodian for our clients’ assets. TDA is one of the largest custodians in the world. Their technology, focus on service, and commitment to independent advisors provide the level of resources we need to deliver planning and investment management to clients throughout Florida and beyond.
Dimensional Fund Advisors. Dimensional is a leading global investment firm that has translated academic research to practical investment solutions since 1981. While they generally only work through select financial advisors, Dimensional has nearly $600 billion in assets under management (as of June, 2019). While we use a variety of solutions to meet our clients' needs, Dimensional fulfills most of the asset allocation sleeves.
Our firm utilizes eMoney planning technology to assist in analyzing a client's situation as well as to provide a dashboard for our clients. This technology provides a high level of organization for our clients while allowing them to see their financial picture in real-time. Sure, there are cheaper tools available, but that just would not be right.