| The Wilkins Investment Group
Investment Philosophy
Our investment philosophy incorporates some basic principals that we believe govern the long-term results of client portfolios:
Successful investing requires that one develop and adopt a specific investment strategy, then build the core of their portfolio around it. Wise investors will adapt their strategy to changing needs and conditions, but success comes from consistently implementing and living with the strategy over long periods of time.
Over periods of 10 years or more, the primary decision that will determine over 90% of your ultimate return is the allocation between stocks, bonds, and money market instruments. Over the long term, stocks have been the best performers*.
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Bonds provide income and serve to reduce volatility. They act as a “shock absorber” in a well-diversified portfolio. Otherwise, they provide inferior returns vs. stocks over the long-term.
Owners of stocks must be long-term investors, as they may periodically decline in excess of 25% in a given year. These “big sales” or “bear markets” occur about every 4-6 years and coincide with economic cycles. Successful equity investing requires that one remain committed to a plan throughout these inevitable “bear” cycles. Thoughtful asset allocation strategies enable investors to do this.
We are not aware of any investment strategy that has produced superior returns by “timing” the market. Instead, successful investors are ones who are disciplined, and consistently implement a strategy over long periods without being distracted by the markets.
“Investment” Performance and “Investor” Performance are two very different things. “Investor” Performance is dictated to a large degree by investor “behavior”. We believe that investor behavior is another critical element to success. Negative investor behaviors that we have observed over many years that have undermined success are: over or under diversification, panic, euphoria, leverage, investing for yield instead of total return, speculating instead of investing, and letting cost basis dictate investment decisions.
Most negative behaviors occur due to a lack of strategic planning and failure to stick with a plan.
Slow and Steady wins the race.
*Brinson, Singer, Beebower Financial Analyst Journal, 1991
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