At Parlan Financial, we espouse an Active Management Philosophy. We believe that active management, which attempts to apply human intelligence to the investment process, provides a more acceptable long term “experience” for the investor.
Notice we didn’t say a more favorable return. We believe there is ample evidence that active mutual fund managers, on the whole, do not outperform their benchmarks, like the S&P 500, over the long haul. In other words, they don’t make more money than a passive, buy and hold approach.
If you look at a chart of the price of the S&P 500 today, the “crash of 1987” is a mere blip. But, if you lived through it on that day, “blip” would not be an adjective you probably would have used.
Now, what about the tech bubble of 2000? And of course there is the financial crisis and meltdown of 2008-09? Gut wrenching. And March of 2013, we’re just getting back to levels seen just before the crises. Oh yes, BOTH crisis’s.
So yes, if you were patient, and held on through the crises, you are right back to where you were – 6 and 13 years ago.
BUT, riding the market down was not a pretty picture and not an easy thing for human beings to endure. Many investors called their advisors and demanded to get out of the market. This happened in 1987, 2000 and 2008. So when we refer to the experience of investing, and how to make it more palatable for the investor, we mean the downside risk inherent with a passive philosophy.
We have grown in our belief that IF one can develop a strategy and investment approach that smooths out the investment experience, then an Active Investing philosophy makes the most sense. If we can improve the experience for the investor, then we have achieved a level of success and have indeed helped our clients.
Discuss your current investment status with Helyn Bolanis
by calling (800) 537-1103