ShankerValleau Investment Philosophy

Our entire approach to investing is designed to provide you with the greatest likelihood of achieving your goals.

We have learned that gain is rarely accomplished without taking a chance, but not all risks provide a reliable reward. Financial science over the last fifty years has helped to identify the risks worth taking and the risks that are not.

Capital Markets Have Rewarded Long-Term Investors

Monthly growth of wealth ($1), 1926−2017

In US dollars. US Small Cap Index is the CRSP 6–10 Index; US Large Cap Index is the S&P 500 Index; Long-Term Government Bonds Index is 20-year US government bonds; Treasury Bills are One-Month US Treasury bills; 1-Month Treasury Bills Index is the IA SBBI US 30 Day TBill TR USD. Treasury Index data sourced from Ibbotson Associates, via Morningstar. Direct Inflation is the Consumer Price Index. CRSP data provided by the Center for Research in Security Prices, S&P data copyright 2018 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Bonds, T-bills, and inflation data provided by Morningstar. Past performance is no guarantee of future results. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio.

Global Stock Philosophy

We use a structured strategy which involves considerable diversification not only in the number of securities held but also in the range of capital markets utilized. That strategy is based on the belief that:

investing in stocks is riskier than investing in bonds, yet has greater expected returns.
market timing is not advantageous.
capital markets are efficient.
costs matter; we generally use no-load funds.
the price of a security reflects all of the available information in the marketplace, so trying to outperform the market is a futile task.

Structure determines performance

Global Bond Philosophy

We recommend that a portion of each portfolio be allocated to bond funds. The bond portion of the portfolio serves as the portfolio’s anchor by reducing volatility.

We do not believe the expected return from investing in either lower credit risk or longer-term obligations is worth the additional risk. We instead advocate:

a diversified approach, not only in the number of obligations, but also in the range of markets included to further reduce risk.
a portfolio that consists of shorter-term, high-quality global bonds.
a lower-risk bond strategy to allow for more risk in equities, where expected returns are greater.
quarterly “rebalancing” of portfolio's stock and bond elements to ensure adherence to your specific asset allocation goal.

Annualized Bond Returns through December 31, 2018

Returns (%)

Bloomberg Barclays Intermediate Goverment/Credit Index