Today's investor is faced with a choice between three competing investment philosophy's; Conventional Management, Indexing and Evidence Based Investing. Conventional Management is based on the belief that markets are inefficient, enabling investors to outperform through superior stock or bond selection and/or market timing. Unfortunately, when we examine the record of Conventional Managers we find little evidence to support these claims. On the contrary, Conventional Managers as a whole consistently underperform markets by an amount equal to their inherently high costs and tax inefficiencies.
Indexing offers an alternative to Conventional Management. Rather than trying to outperfom stock and bond markets, Indexing, by replicating popular stock and bond indexes, delivers low cost and broad diversification. Despite predictions to the contrary, more often than not settling for an index fund has led to above-average returns. However, we believe that Indexing can be improved upon.
Gasber Financial Advisors, Inc. endorses a prudent alternative to Conventional Management and Indexing - Evidenced Based Investing. Based on rigorous academic research and over eight decades of empirical data, Evidenced Based Investing is an evolution of the traditional Passive/Indexing approach and is anchored on four important principles.
Identifying a client's tolerance for risk is the first and most important step in a successful investment program. In order to insure an accurate assessment, we employ the FinaMetrica Risk Profiling System. Developed and tested in Australia over 4 years with the assistance of the University of New South Wales' Applied Psychology Unit, the FinaMetrica system has gained international recognition as a world's best practice since its Australian launch in 1998. Because risk tolerance can change over time, we retest clients on a three year cycle.