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Trading Philosophy

Investing is no longer an endeavor shrouded in mystery. Technological advances have made information plentiful and accessible. Yet all too frequently, we are bombarded with information that is confusing, irrelevant - or potentially harmful to long-term investment goals.

Successful long-term investing requires not only access to information, but also the experience, skills and discipline to interpret and employ it prudently. Volatile financial markets, changing tax laws, greater employment mobility, and complex estate planning strategies demand the right resources to guide you and your family or organization.

The term "wealth management" has become increasingly common of late, but the delivery of such services can vary widely. In our view, the popularization of the term simply reflects the value of the comprehensive approach to investment management. At Abacus Financial Advisors, wealth management means creating a framework for the management of financial assets that carefully considers multiple long-term objectives and constraints, to insure effective implementation of each client's planning strategies.

We are long-term investors who recognize the value of patience and perseverance. We follow a balanced approach that incorporates asset allocation, diversified security selection, and tax-sensitive investing. Our investment philosophy is a combination of old values and new science. We combine up-to-date investment skills and knowledge of modern portfolio theory to create separately managed portfolios that meet each client's financial goals.

We seek capital appreciation that is consistent with prudent risk, using portfolio diversification as a cornerstone of our approach. We minimize risk by using asset classes that range from fixed income securities with differing ratings to equities of aggressive growing new markets. At Abacus, we believe there is a constant tension in the market between growth and value stocks, which has become even more pronounced over the past decade. Therefore, our discipline is to manage portfolios that balance the tension between companies that are dynamic, yet riskier, in terms revenue growth in newly emerging markets and companies that provide reasonable value in more stable market sectors. In this packet is a chart that demonstrates the tension of growth and value portfolios in the U.S. stock market from 1975 through 1998.

Our stock selection method emphasizes flexibility, planning and patience. We select equities based on disciplined quantitative and qualitative techniques that separate the wheat of intrinsic long-term value from the chaff of Wall Street hype and speculation.

Abacus works with two outstanding independent research organizations - Argus Research Company in New York City and Northern Trust Investment Advisory Services in Chicago. Each firm maintains a list over 300 closely followed stocks and provides detailed weekly reports that include company and industry analysis, investment strategy, and timely earnings estimate revisions. These research companies publish weekly buy/hold/sell lists based on rigorous company analysis, interviews with corporate executives, and in-house valuation models.

Abacus does not use research published by brokerage firms. We believe that brokerage coverage is biased because of preexisting investment banking relations and the desire to encourage trading activity between brokers and clients.

As we seek to ensure that our clients have reasonable investment return expectations, we need to be realistic with changing market conditions and focus on long-term growth rather than short-term fluctuations. There is no question that it would be helpful to future results if the higher productivity and low inflation environment of recent years were to continue well into the next century. We know, however, we must be prepared for ever changing economic conditions and increased global influences on market returns.