INVESTMENT MANAGEMENT
Applying the C+I+G+X formula to your financial life
In the Portfolio Management process we use CIGX to analyze both the asset allocation and the underlying investment in your portfolio.
STEP 1: TACTICAL ASSET ALLOCATION
We take a tactical approach to asset allocation, assessing macro-economic factors to determine the overweight and underweight of asset classes within a fully diversified portfolio. Current and anticipated global economic conditions will affect the performance of assets classes and lead to an adjustment in the allocation of the assets.
The asset classes are:
Cash
Real Estate
Equities
Fixed Income
Commodities
Within the asset allocation model, we use CIGX to analyze and select the underlying investment.
Consumption: We look for countries or regions whose population has strong but sustainable consumption practices.
Investment: We look at the capital markets and availability of investments. Liquidity is of primary concern, but transparency, rule of law, and competition, are also important factors. We also look at specific market sectors as investment opportunities that are expected to outperform the broader markets.
Government Spending: We look at the effectiveness and fairness of government spending at home and abroad and assess the revenue generation of the government. Tax receipts can indicate a strong domestic or export oriented economy, while high-debt countries, or those that frequently monetize debt should generally be avoided.
Exports: Strong exports are generally indicative of a stable or growing economy. We overweight countries that we expect to have strong exports.
STEP 2: ANALYZE SECTORS AND INDIVIDUAL SECURITIES
CIGX is also applied at the corporate level. When analyzing securities we look at corporate spending and investment. We seek companies that are managing their cash flow and investing wisely. We also look at sales and market penetration, which we equate to exports.
Companies that have high debt spend a large percentage of revenue servicing that debt. We are not opposed to owning their debt, but would stay away from their equities without a compelling reason to the contrary.
Business sectors also perform on differing cycles depending on supply and demand issues, innovation, government policy and other reasons. These cycles are closely monitored to determine whether an overweight in, say technology or energy is warranted.
STEP 3: DEVELOP AND MAINTAIN OUR MODEL PORTFOLIOS
CIGX, LLC offers multiple global investment strategies model portfolios. These portfolios are flexible both in asset allocation and in underlying security selection.
We offer four model portfolios, two income oriented and two growth oriented:
Conservative
Moderate
Growth
Aggressive Growth
ECONOMICS AND YOUR WEALTH:
As we consider economics and wealth, certain considerations stand out.
First, wealth is certainly not achieved by consumption. Any consumable, by definition, loses some or all of its value at purchase. Consumption made possible by debt increases this loss of wealth. In financial planning, reducing consumption is not necessarily the goal.
We want to manage consumption by budgeting, managing cash flow, and reducing or eliminating debt. We want to ensure that we do not use debt to finance consumption.
Second, investments are historically a good way to attain wealth. Within the financial planning process, we seek to increase investment by improving cash flow and developing an investment plan that will assist in attaining financial goals.
These goals might include purchasing a home or second home, paying for college, saving for retirement, and increasing financial security by having additional sources of revenue. With these goals in mind, we attempt to develop an investment plan and strategy that we believe will best help meet your goals.
Third, governments use a variety of sources of revenue to pay for their expenditures. The primary revenue driver is taxes. The other ways of generating revenue include issuing and selling government bonds or printing money. In financial planning, we include tax planning as a way to enhance your chances of meeting your goals. Usually, a reduction in taxes is preferred. While government spending may or may not increase your wealth, taxation definitely will decrease your wealth.
Note: While we discuss the advantages of tax planning and offer tax advantaged investments, we do not offer tax preparatory planning, tax advice or tax compliance services. Please consult your tax advisor regarding the availability and benefits of tax-advantaged investment options. We strongly recommend the use of a tax attorney or certified public accountant. We are happy to communicate with these professionals as appropriate to assist you.
Finally, we look at exports. For financial planning purposes, we equate export with the transfer of assets, rather than goods and services, and to heirs or beneficiaries, instead of a foreign country. The principal applies, because transferring wealth to heirs is preferable to paying it in taxes, just as exports are a better increasing factor of GDP than government spending would be.
Effectively, we strive to decrease consumption and taxation, and attempt to increase investment and wealth transfer. Services to achieve this goal include, budgeting, retirement, college, and investment planning, insurance planning, tax planning, and estate planning.