Investment Management

At Applied Capital, we invest differently.

Guided by a strong belief in efficient markets and academic research, we help clients build and manage well-diversifed portfolios in a cost effective manner. We serve clients who want transparency and results. Our goal is to help clients become disciplined investors who understand the investment process.

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Our Disciplined Investment Process

Diagram showing how stocks and bonds are conduits for raising financial capital for companies, with investors providing money through stocks (ownership shares) and bonds (loans, interests).

What are stocks and bonds?

Flowchart titled 'Investment Process' with steps and categories, including start, bonds, stocks, US stocks, international stocks, and specific stock asset classes, color-coded green, red, and blue.

When should I buy or sell?

Bar graph showing how missing more days of the stock market's best days reduces overall growth: total growth is $26,322; missing 1 best day reduces growth to $23,590; missing 5 best days reduces growth to $16,625; missing 15 best days reduces growth to $9,113; missing 25 best days reduces growth to $5,632. US T-bills value is $2,246. Text indicates reacting to market drops can hurt performance.

How should I broadly allocate my investments and diversify into specific asset classes?

An infographic titled "Portfolios Can Be Structured to Capture Full Market Returns" showing four scatter plots comparing market, company size, relative price, and profitability, with labels for high expected return.

Should I take an active or passive approach to investing?

Guiding Investment Principles

  • The market is an effective information processing machine. Each day, the world equity markets process billions of dollars in trades between buyers and sellers — and the real-time information they bring helps set prices.

  • The market’s pricing power works against mutual fund managers who try to outperform through stock picking or market timing. As evidence, only 23% of US equity mutual funds and 8% of fixed income funds have survived and outperformed their benchmarks over the past 20 years.

  • Some investors select mutual funds based on their past returns. Yet, past performance offers little insight into a fund’s future returns. For example, most funds in the top quartile (25%) of previous five-year returns did not maintain a top-quartile ranking in the following five years.

  • The financial markets have rewarded long-term investors. People expect a positive return on the capital they supply, and historically, the equity and bond markets have provided growth of wealth that has more than offset inflation.

  • There is a wealth of academic research into what drives returns. Expected returns depend on current market prices and expected future cash flows. Investors can use this information to pursue higher expected returns in their portfolios.

  • Holding securities across many market segments can help manage overall risk. But diversifying within your home market may not be enough. Global diversification can broaden your investment universe.

  • You never know which market segments will outperform from year to year. By holding a globally diversified portfolio, investors are well positioned to seek returns wherever they occur.

  • Many people struggle to separate their emotions from investing. Markets go up and down. Reacting to current market conditions may lead to making poor investment decisions.

  • Daily market news and commentary can challenge your investment discipline. Some messages stir anxiety about the future, while others tempt you to chase the latest investment fad. When headlines unsettle you, consider the source and maintain a long-term perspective.

  • A financial advisor can offer expertise and guidance to help you focus on actions that add value. This can lead to a better investment experience.

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