Our Investment Philosophy

Investment planning, done right, is boring. Long-term investment success is not achieved through market timing, day trading, chasing returns, or hitting the lottery. Two principles are the lynchpins holding your investment plan together.

1. Investor Behavior

The single most important resource available for financial success is the capacity to consciously and realistically choose how many monetary resources will be allocated to create the desired life-style. Behavior matters more than return, more than the bottom line numbers.

While in the accumulation (savings) phase, income needs to be set aside to begin to build net worth. During the early years, growth will come almost entirely from the contributions taken out of cash flow and put into the portfolio. Over time, the investment return will become a more and more significant part of the growth.

During the withdrawal phase, spending behavior again matters more than investment return. Attending to early life-style choices will have the most impact on the ultimate portfolio success. At Button Financial, we use retirement scenarios, tools that reveal what may be sustainable withdrawal amounts. In addition, it is always wise to remember that spending behavior can be controlled by an investor whereas investment return can, at best, be managed.

2. Investment Planning

Investment planning is designed to provide some combination of safety, income and growth. It is not fancy stock picking. To be successful, an investor must have two things: Realistic expectations of the financial markets (requiring some degree of education), and to know and invest according to his/her risk tolerance (an ongoing exercise).

Investors delineate goals, strategies and risk management in the creation of an Investment Policy Statement (IPS). Another aspect of the IPS is an asset allocation model, which is build around an investor's risk tolerance and level of investment sophistication. This is part of Modern Portfolio Theory, the investment management philosophy used at Button Financial, which also includes the Efficient Market Hypothesis and the Random Walk Theory .

Button Financial believes that asset allocation decisions are far more important than security selection and market timing. For the portfolios we design and manage, Exchange Traded Funds (ETFs), or indexes, are used for the core equity portion, with occasional overweighting in favorable sectors via large company stock.

It has always been the practice at Button Financial to observe and learn about leading-edge investment practices, exercising extreme due diligence before recommending implementation by a client. That said, over time, we have quickly become familiar with complex concepts and have frequently been one of the first to utilize quality opportunities for clients. For example, retirement planning scenarios include Monte Carlo Probability Analysis, a spreadsheet simulation which randomly generates values for uncertain variables over and over to simulate a model.