Investment
Philosophy

Our investment philosophy contains six guiding principles:

Market Volatility

Embracing Volatility

Global Asset Allocation

Global Asset Allocation

Systematic Investing

Systematic Investing

Multiple Portfolios

Multiple Portfolios

Selecting the best managers

Selecting the Best Managers

Periodic Rebalancing

Periodic Rebalancing

Market Volatility

1. Embracing Volatility

Understanding market volatility is the core of our investment philosophy. Market volatility is a consistent, nonstop reality that occurs in all markets and across all sectors, both domestic and global.

When it comes to successful investing strategies, market volatility represents a clear line in the sand. While others shy away, Merrill Financial Associates believes there is opportunity in volatility.

“Many investors . . . are elated when stock prices rise and depressed when they fall. . . . This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.”
— Warren Buffet

“When there is blood on the street, I am buying.”
— Baron Rothschild

“You make most of your money in a bear market. You just don’t realize it at the time.”

— Chris Davis

Global Asset Allocation

2. Global Asset Allocation

We believe that global asset allocation helps minimize risk and maximize returns. Our proprietary asset allocation program allocates money to the world’s money managers, each specializing in a particular sector or region of the world’s economy. Every client account is assigned its own asset allocation portfolio, which is then updated daily and rebalanced periodically.

Systematic Investing

3. Systematic Investing

Systematic investing involves electronically adding money to an account on a regular basis, which could include a daily, weekly, or monthly cadence.

“[Systematic investing] will pay off ultimately, regardless of when it is begun, provided that it is adhered to conscientiously and courageously under all intervening conditions.”
— Benjamin Graham

Multiple Portfolios

4. Multiple Portfolios

We encourage each client to have multiple portfolios, each with its own unique blend of strategy, risk, and return. By investing in multiple portfolios, clients can have more confidence in achieving their lifetime goals.

Merrill Financial Associates clients typically have three portfolios:

  • Conservative portfolio (nest-egg money)
  • Moderate portfolio (growth and income)
  • Growth portfolio (primarily growth)
Selecting the best managers

5. Selecting the Best Managers

We are an open-architecture firm with a universe of investment options. During our portfolio construction, we focus our analysis on identifying investment managers that offer strategies to both maximize returns and minimize risks. The resultant manager selections are continuously under scrutiny by our research team to ensure that we are offering our clients the optimal solutions within each portfolio strategy.

Periodic Rebalancing

6. Periodic Rebalancing

Periodic rebalancing involves selling portions of appreciated assets and buying portions of depreciated/less appreciated assets. This process helps growth investors to buy low and income investors to sell high. Each client is preassigned specific dates when their portfolios are analyzed and rebalanced. For those clients who are systematically adding to or taking from their portfolios, rebalancing occurs at the time of the purchase or sale.

*Systematic investment plans do not assure a profit or protect against loss in declining markets. Such plans involve continuous investment, regardless of market conditions. Markets will fluctuate, and clients must consider their ability to continue investing during periods of low price levels.

**Diversification does not ensure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.

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