The foremost assumption underlying our investment thinking is inflation. We see nothing in our economic system that encourages us to believe we are going into an environment of no inflation. We do expect an extended period of low stable inflation, assuming Congress or the Federal Reserve System does not alter its current behavior dramatically. This means that the biggest risk you ever face over time is loss of purchasing power of your savings. The only question is the rate at which this loss occurs. We believe common stocks or mutual funds should be an important part of any investment program as an investment vehicle to offset these inflationary effects.
On the income side of portfolios, we look for short to intermediate bonds (either tax free or taxable, depending on client tax positions) and convertible preferred stocks and bonds that pay a higher income level while still maintaining longer term participation in the underlying common stock. On the equity side of portfolios, we use a quantitative value model to screen outside databases to identify attractive securities from a valuation point of view. We are looking for companies with good earnings, both quarterly and annually, over the last several years. We look for new products, management or leadership. We like to have good sponsorship (i.e., other people agree with us). We want to own leaders in their industry and we want the market to be favorable. Finally, we want to minimize risk taken to achieve the return you desire.
Most importantly, we want you to understand what we are doing and to be comfortable with our action.
Virginia Capital Management Group is a fee only Investment Advisor whose principals are all native or long time Virginia residents. We understand the value of hard work and the importance of preserving hard earned assets for the future. Our investment philosophy could best be described as Enlightened Conservatism. While all investments have some risk, and without some risk there is no reasonable expectation of gain, we also understand that risk should be reduced as much as possible. We would rather err toward safer investments and receive less return than to chance the reduction or loss of a client's portfolio.
In spite of this rather conservative approach, we also understand that the world passes by those who sit too long. We further believe that one of the major risks to which all clients are exposed is that of continued inflation. Consequently, we constantly examine options and are prepared to implement investment portfolios which match specific client goals and the investment environment we forecast.