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INVESTMENT APPROACH
Stock and bond selection is based on a careful analysis of fundamental factors. BCM believes that the allocation of assets between various investment alternatives is one the most important and rewarding decisions that can be made by any professional money manager. Asset allocation is governed by the client`s investment objective along with an assessment of the economic and market environments. Therefore, asset allocation is continually reviewed. Critical decisions are based upon an analysis of the expected return from stocks, bonds and cash equivalent securities. The expected returns from stocks are compared with the yield-to-maturity of fixed income securities. The risk premium of stocks helps to determine the percent invested in equities.
By investing in a variety of securities helps reduce the risk of price fluctuations in a single security. The prices of most individual securities tend not to move close together. As the price of one increases, the price of another may move up less or decrease. Consequently, by investing in several securities that is by diversifying can often smooth out fluctuations. The balancing of equities and bonds reduces the investors dependence upon economic condition and provides the portfolio with a greater ability to generate consistent returns over a succession of market cycles.
INVESTMENT PROCESS
The first step in the investment management process is to determine the client`s investment objectives, constraints and preferences. A mutual understanding between the client and BCM regarding an acceptable risk level, income requirement and growth expectation is essential. The primary objective is to maximize total return within each clients acceptable risk tolerance and unique circumstances. Implementing portfolio policies and capital market expectations will help structure the optimal portfolio for the client.
A series of quantitative and qualitative variables are continually monitored. Portfolio adjustments are made as appropriate to reflect significant change in any or all of the relevant variables. With every investment from the safest U.S. Treasury issue to the most speculative stock, there is a fundamental relationship between risk and potential reward. In general, the higher the potential reward of an investment, the more risk involved. In other words, if you want a high return on your investment, you run the risk of a possible decline in its value.
Finally, BCM understands the importance of communicating frequently with its clients on both an administrative and on investment matters. Periodic meetings are necessary to review investment performance and portfolio structure to discuss prevailing economic conditions and financial matters and to consider modifications to established investment guidelines. | 