Certain Wealth in Uncertain Times®
OUR INVESTMENT PHILOSOPHY
The three pillars of our investment philosophy are:
1. Simplify, simplify. You don't need 3 index funds on the S&P 500 or 5 different brokerage relationships. And while there may be some seasons in the market where alternative investments are appropriate, most of the time you can forget about hedge funds, futures, most options, day-to-day market timing and all the other paraphernalia that some advisers try to saddle you with. In the long run, buying common stocks at a good price of companies that are growing their market share, revenues and earnings will still be the very best strategy you can use in seeking a comfortable and secure future. Simplify to succeed.
2 — Risk management must come before wealth management. Every company, every industry, every emerging nation, and every investment strategy has its adherents and proponents. But we believe that isn't the place to start. We believe every potential investment must first be viewed in the cold light of this simple question: "What could go wrong?" Prospectuses, 10-k's, annual reports and so on must list the various risk factors in their business. We'll wager not 1 in 100 investors reads these before investing, and can only hope that number is slightly better in the investment advisory business. For us, that's the first place to look. We work with you to protect your assets. Then, and only then...
3 — We seek opportunities in undervalued sectors at attractive valuations to maximize your net worth. We allocate assets based on constant geopolitical, economic, sector and industry review, we reallocate portfolios as appropriate, and we buy quality firms, preferably when they are beaten down by some short-term event. We believe this is what allows us to regularly discover excellent investments that others miss. It takes a lot of time -- ours, not yours...
1. Simplify, simplify. You don't need 3 index funds on the S&P 500 or 5 different brokerage relationships. And while there may be some seasons in the market where alternative investments are appropriate, most of the time you can forget about hedge funds, futures, most options, day-to-day market timing and all the other paraphernalia that some advisers try to saddle you with. In the long run, buying common stocks at a good price of companies that are growing their market share, revenues and earnings will still be the very best strategy you can use in seeking a comfortable and secure future. Simplify to succeed.
2 — Risk management must come before wealth management. Every company, every industry, every emerging nation, and every investment strategy has its adherents and proponents. But we believe that isn't the place to start. We believe every potential investment must first be viewed in the cold light of this simple question: "What could go wrong?" Prospectuses, 10-k's, annual reports and so on must list the various risk factors in their business. We'll wager not 1 in 100 investors reads these before investing, and can only hope that number is slightly better in the investment advisory business. For us, that's the first place to look. We work with you to protect your assets. Then, and only then...
3 — We seek opportunities in undervalued sectors at attractive valuations to maximize your net worth. We allocate assets based on constant geopolitical, economic, sector and industry review, we reallocate portfolios as appropriate, and we buy quality firms, preferably when they are beaten down by some short-term event. We believe this is what allows us to regularly discover excellent investments that others miss. It takes a lot of time -- ours, not yours...
OUR SERVICES AND OUR FEES
OUR SERVICES: Unless you already have a special brokerage relationship, we will assist you in selecting from the best of the online brokerage firms that provide you SIPC, FDIC and/or additional insurance, prompt trade confirmations, a written monthly statement and the finest service. (Like TD Ameritrade, Schwab and E-Trade.) Your account is custodianed with these national firms, not with Stanford Wealth Management LLC. Their job is to give you the peace of mind of dealing with a national firm. Our job is to research, analyze and select the best investments to help you protect and grow your portfolio.
We will discuss your portfolio with you as frequently as you desire, will execute all buys and sells, will ensure that all transactions are properly documented, will inform you as to actions we have taken on your behalf, and will provide a quarterly review of your performance versus the standard benchmarks.
OUR FEES: We see it as more challenging to allocate $2 million than it is to manage $500,000 -- but we don't believe it is difficult enough to justify the high fees many charge! The typical industry standard fee is 1% or more of assets under management. We start at 1%, as well. But then, at $550,000, just above our minimum portfolio amount, we reduce your fees on the amount under management above $550,000 from 1% to 0.75%.
We may save you money in other ways, as well. As brokerage industry veterans who have held in our careers virtually every brokerage certification from the NYSE, NASD, and all 50 states, we know how to negotiate the best fees on your behalf; we know when to challenge a poor execution; and we know how to trade without allowing the brokers to increase their OTC spread. We know the business -- from the inside out. This saves you time and aggravation and maximizes your returns.
OUR PORTFOLIO MANAGERS
Joseph Shaefer, our Chief Investment Officer, and Heather Williams, our Chief Operating Officer, will personally approve investment and custodianship decisions on your behalf. Between them, they have more than 80 years experience in the investment business. These are the two principals of our firm and the buck stops with them. If you have an investing question, you may call Joe directly. If you have a question about your account balance, are requesting a disbursement, dealing with your IRA and other operational issues, you may call Heather directly. If either are unavailable, someone will take your call and have them get back to you promptly. Ours is a very personal approach. We will never hand you off to a junior portfolio manager.
Both Mr. Shaefer and Ms. Williams have attained the highest levels of certification in the brokerage industry (Registered Principal, Financial & Operations Principal, Municipal Securities Principal, Options Principal, etc.)
Joe retired as Senior VP and head of the Fixed Income Division of investment firm Charles Schwab to found Stanford Wealth Management and to speak and write on investment and geopolitical / economic subjects. He is a 36-year veteran of the US Army and US Air Force, having served both active and reserve, stateside and deployed. He retired as a USAF Brigadier General but maintains his security clearance and serves as senior geopolitical analyst for Omnis, Inc. He is the author of the investment classic Bringing Home the Gold. Joe has been interviewed on CNN, Fox, CNBC, ABC and other financial television and radio shows and has been quoted in Forbes, The Wall Street Transcript, Barrons, Financial World & scores of other publications.
Both Mr. Shaefer and Ms. Williams have attained the highest levels of certification in the brokerage industry (Registered Principal, Financial & Operations Principal, Municipal Securities Principal, Options Principal, etc.)
Joe retired as Senior VP and head of the Fixed Income Division of investment firm Charles Schwab to found Stanford Wealth Management and to speak and write on investment and geopolitical / economic subjects. He is a 36-year veteran of the US Army and US Air Force, having served both active and reserve, stateside and deployed. He retired as a USAF Brigadier General but maintains his security clearance and serves as senior geopolitical analyst for Omnis, Inc. He is the author of the investment classic Bringing Home the Gold. Joe has been interviewed on CNN, Fox, CNBC, ABC and other financial television and radio shows and has been quoted in Forbes, The Wall Street Transcript, Barrons, Financial World & scores of other publications.
Heather Williams began her investment banking career working with Initial Public Offerings for Birr WIlson and ended that side of her investment career many years later at Charles Schwab where she served as corporate trainer for what was then the fastest-growing company in the Fortune 500, as in-house management consultant to the branch network, and as branch manager of the Schwab Honolulu branch office. She has more recently been a consultant to Goldman, Sachs and a number of other firms, and is an acknowledged expert in the brokerage operations community.
REPRESENTATIVE PORTFOLIO RESULTS
We have titles this section “representative portfolio
results” for a reason. In our practice,
we have some clients in their 80s who are reaping the rewards of a lifetime of
hard work and can not afford any risk. We
have entrepreneurs in their 40s and 50s we know their industry cold and are
looking to increase their net worth. And
we have young people just embarking or in the early stages of their
careers. There is no such thing as “actual”
results that encompass all clients. Any
adviser that purports to provide you with such a thing must be using a
cookie-cutter approach where each client gets exactly the same investments,
regardless of their temperament, risk profile, goals, etc.
We don’t work that way. Each client portfolio is structured for that client. There is some overlap but no two portfolios are ever exactly the same. So we provide here the results from our monthly Investor's Edge: this chart is featured in every issue and reflects the performance of the two portfolios therein versus the S&P 500, with all dividends reinvested. Your performance will never exactly mirror this chart, but the trend should be the same. Always bear in mind, of course, that prior successes are no "guarantee" of future performance.
We don’t work that way. Each client portfolio is structured for that client. There is some overlap but no two portfolios are ever exactly the same. So we provide here the results from our monthly Investor's Edge: this chart is featured in every issue and reflects the performance of the two portfolios therein versus the S&P 500, with all dividends reinvested. Your performance will never exactly mirror this chart, but the trend should be the same. Always bear in mind, of course, that prior successes are no "guarantee" of future performance.
Representative portfolio results
OTHER FAQs -- Questions and Answers about Stanford Wealth
Q: Tell us your approach to managing money at Stanford Wealth Management.
A: Too many individuals and money managers start with a discipline, but then meander through a series of purchases based on rumor, inside information (that isn’t,) fear of missing something, fear and euphoria. They end up with a portfolio that looks as if 20 random strangers threw darts at the stock charts.
Ours is a more disciplined approach.
We reallocate our stock portfolios by reducing our equity exposure as traditional value barometers such as PE Ratios, Price/Book Ratios, Price/Sales Ratios and Dividend Yields enter seriously overvalued territory, and increase our equity exposure as these barometers enter undervalued terrain. Our reallocation component forces us to review the portfolio with some frequency and, by regular re-balancing and cost-averaging, forces us to buy low and sell high. And we only purchase after a thorough review of the risk parameters. This screens out a lot of great-sounding concept stocks and leaves us with more time to follow those investments we deem worthy of our attention.
Q: OK, so how DO you select individual stocks?
A: The answer is, "Sometimes we don't." Sometimes we use stock market proxies like Exchange-Traded Funds, closed-end funds, and mutual funds, as when we want to be invested in an entire sector. If we believe the entire sector or industry is appropriate, we find the diversificatiuon achieved by these products provides an extra layer of protection against unexpected single-company risk. (Think the Union Carbide fiasco in India many years ago or the more recent BP mishandling of the blowout in the Gulf of Mexico.)
When we do select individual stocks, we use the value indicators of Price/Earnings Ratio, Price/Book Value Ratio, Price/Sales Ratio, and Cash Flow -- after we verify the company's leadership position in its industry, the moat it has around its business, the quality of its management, and its financials.
Q: What about takeovers -- does that come into play in your consideration of a stock?
A: Yes and no. No, it isn't part of what we think about when we buy a stock, but clients regularly ask us if we have some kind of inside information or stock tips because so many of our companies are acquired.
Honestly, we don't have any information beyond what is available to anyone willing to tear into an annual report, a 10-k and a balance sheet! It's just that we're looking for the same financial and stock price qualities that potential corporate acquirers look for. Potential acquirers want to find companies that sell at a fair valuation so that they can tell the public shareholders: "Look, we can give you a 40 percent premium over the current price of your stock. Existing management sees this as a good deal and, by the way," (they say to themselves) "we think we're still getting a good deal at these prices."
Since we look for the same things that many acquiring firms look for, we have lots of stocks taken away from us at a premium. We don't need inside tips or information; we simply have an investing style that results in lots of our companies being acquired by other firms.
Q: How qualified are the money managers at Stanford Wealth Management?
A: Each of our money managers has been in the business for 40 years or more. You want white hair, not white knuckles, on your side these days! Each of us spent decades in the brokerage and money management business and have been Registered Representatives (stockbrokers), Registered Principals and NYSE Branch Office Managers (their bosses), Registered Options Principals (experts in listed options), Financial and Operations Principals (leaders in financial management and operations), and much more. We know the stock market cold — and hot.
Q: Do you believe in top-down or bottom-up analysis of stocks?
A: Yes. Each in its own season. Too many professional money managers answer that question in the most sonorous tones, "Well, we are basically top-down macro-economic investors," or, "Our analysis leads us to believe that a bottom-up approach yields the most compelling returns." (They go to a special Trust-Me School to learn to talk like that!)
While we at Stanford Wealth Management certainly think of ourselves as first, asset allocators, then industry observers, then stock selectors, we don't invest in a rigid manner. We are typically a big-picture manager, but if we uncover a company that commands our interest, we will immediately begin researching that firm, we'll talk to their management, customers and competitors, we'll find out all about them, and then we'll decide whether to buy the stock or not. So while we consider ourselves top-down investors, we still buy special situations for our clients.
Q: Can an investor do the same thing you do -- on their own?
A: Absolutely. All someone needs is the TIME to do the research and keep up with the stock quotes, a certain amount of EXPERIENCE to be able to separate the wheat from the chaff, and -- most importantly -- the DISCIPLINE to stick to their asset allocation plan and industry and stock selection.
Q: Let's cut to the chase. Where is the stock market going?!?!?
A: We haven’t a clue — in the short term. In the long term, we believe that the world is becoming more capitalist and free trade is growing and those two trends ensure continued growth in capital markets.
We will, however, make educated guesses based on history. I am on record predicting Dow 10,000 by 2000 and on record predicting a decline below 8000 in 2002. Based purely on history and experience, I believe we will probably see Dow 20,000 within another 10 years.
But there are three things in this world I know I will never know: where the stock market is going tomorrow, how we have allowed government to become our master rather than our servant, and why teenagers do whatever they do. So I stick with what I do know -- how to find undervalued companies in any market environment.
Our clients typically become clients because they recognize that they have a full-time career or would rather spend their precious time on the links or with their grandchildren. They make more money doing surgery or building companies or guiding river adventures, so they devote their lives to what they are best at and ask us to handle the part we are best at. That's not always an easy decision to make -- many of us are too ego-involved in the investing process. We're great doctors or great lawyers or great architects or ski instructors or schoolteachers or whatever, so we assume we should be great investors, too. Nothing could be further from the truth. I'd be a terrible lawyer or brain surgeon -- but we believe we are both safe and good investors. Most of the time, the investing process is just too time-consuming to be done part-time.
Q: If I want you to manage all or a portion portion of my portfolio, what are your minimums and what will you charge me?
A: We provide the following rates, based upon total assets in the account:
Our minimums are $500,000
On the amount up to $550,000....... 1.00%
On the amount above $550,000....... 0.75%
In addition, we enjoy special negotiated rates from some of the best low-cost brokerage firms in the country. The commissions you pay on equity, mutual fund, and other orders are so low (and sometimes free) that you may save enough, compared to a full-commission stockbroker broker, to pay 100% of our management fees!
Q: How can I discuss my needs with you?
A: Call us at 800 253-2088 or e-mail us at inquire@stanfordwealth.com. One of our two senior managers, Joseph L Shaefer or Heather Williams, will respond personally.