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Investment Philosophy

Many other financial service firms offer an approach based on the assumption that the markets are generally inefficient, and that clever individuals can regularly exploit and profit from the anomalies.  At Arnett Carbis Toothman Wealth Advisors, we follow a different approach.

We believe in evidence-based investing – a philosophy heavily influenced by the Nobel Prize-winning work of Eugene Fama.  This work focuses on the idea that markets are actually efficient and that prices reflect any good news or bad news virtually instantaneously.  Additionally, the evidence shows that the opportunities to exploit any market inefficiencies that do exist are too few and far between to effectively and affordably pursue.

An evidence-based investment approach offers many benefits when compared with an active investment approach.  It involves buying and holding market components, whereas an active investor or fund manager tries to pick the next winning stock or time where the market is headed next.   An evidence-based approach offers these major benefits:

  • By holding entire market components, our clients take advantage of the benefits of diversification.
  • By tilting the portfolio to riskier or less risky components, our clients can capture market returns, tailored to their individual tolerance for more or less risk.
  • Our clients maintain control of their portfolio components by avoiding the style drift that can come from active management.
  • Expenses can be minimized.
  • Tax efficiency can be maximized.

Our logical, transparent strategies focus on the things that investors can control – minimizing costs, diversifying broadly and considering tax efficiency  – and ignoring the things investors can’t control – like the general movement of the markets.

While guiding you to achieve your financial goals, we help you understand the evidence behind it all so that you feel confident in the decisions we make together on your financial future.

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