What would you say you do here? [Post 31]

The most common question I receive when asked about my job is, “Are you a stock picker?”

No, I do not select individual stocks as a profession. My official role is as an Associate Wealth Advisor. I work under a few lead advisors in Springfield, IL where we focus on financial planning topics such as investing, tax/estate planning, and retirement planning.

Our investment philosophy centers on an evidence-based approach, which emphasizes asset classes over specific investments. The trades I execute typically serve purposes such as generating cash for distributions, investing fresh assets, rebalancing portfolios to maintain their target allocations, or conducting tax loss harvesting in specific market conditions.

Our philosophy leans away from active selection strategies as the historic performance of these managers has been vastly underwhelming.1 We instead place emphasis on diversification and funds targeting market factors such as size, value, profitability, momentum, and quality.

By investing in asset classes that we believe in for the long term, we simplify the investment process. This means that when new assets are introduced to the portfolio or when a particular asset class either underperforms or excels, we already possess a framework for how to reallocate assets to maintain balance. Eliminating the need to react to events that may not warrant an allocation change.

This is how I operate as a portfolio manager without engaging in the practice of hand-picking individual stocks.

1: SPIVA. (2023, June 30). SPIVA U.S. Scorecards. S&P 500 Dow Jones Indices.

https://www.spglobal.com/spdji/en/research-insights/spiva/

Image: Beiter, C. (2019). All memes ’ office space bobs. Imgflip.

https://imgflip.com/meme/92663631/Office-Space-Bobs