RJM Investments - Building Trust Through Wisdom and Integrity

Investment Philosophy

My investment philosophy reflects my core values and experience. It’s a simple and professional proposition:

INTEGRITY is at the core of all my work. I do what I say I will do. I adhere to the processes and principles that I profess, discussing and disclosing every step I take and including the client in decisions to the degree that they’re comfortable. I believe conflicts of interest can threaten the integrity of the investment process. I avoid them by refusing compensation from “product” sales – I do not accept commissions from mutual fund investments, brokerage houses or insurance companies based on recommendations. I am a fee-only fiduciary: I am paid solely by my clients, and legally required as a fiduciary to always act in the best interests of my clients.

TRUST follows integrity. As clients observe my methods and see that I deliver what I promise, my expectation is that their confidence will build and I will earn their trust. For trust to endure, I must demonstrate integrity in each interaction with each client. I must listen, explain, disclose, discuss and report exactly as I promised.

WISDOM comes from knowing what is true and right, and applying what is “true and right” to all actions and judgments. This is critical to our process of investment management. The odds of a healthy life can be enhanced by following fundamentally “healthy” activities and principles, but good health can never be guaranteed. The same is true of investing. When short-term results disappoint, clients frequently find a review of the basic, “healthy,” long-term-oriented processes that we have followed consistently reminds them or their original investment goals and expectations and confidence is restored.


I believe that a carefully allocated, well diversified portfolio of consistently excellent no-load mutual funds offers the highest probability of long-term investment success with the lowest risk of under-performance. The great majority of our portfolios are retirement accounts, for which my first goal is to protect principle, and then to earn a reasonable return. I am dedicated to following solid, time-tested fundamentals of investing that provide the best prospects of long-term investment success. The funds I recommend are typically from smaller and less prominent investment companies, actively managed by individuals with long and successful experience. In every case, the fund manager has demonstrated a consistent application of fundamentally sound investment processes, and his/her resulting success has been recognized. In most cases, the managers hold significant personal investments in their funds – a factor considered by Morningstar, Inc. to be the one most highly correlated with good results.
I use the S&P 500 as our standard for risk and return. I am happy to say that over our nearly ten-year history, I have performed as well as or better than this standard.


RJM's investment strategy is to place safety of principle before gains, and to earn broad stock market returns with less risk.  Our focus is squarely on what works best, on maximizing investment outcomes over long time periods, on continuously balancing risk against returns.  We offer a cautious, understandable, long-term approach that we believe offers the best opportunity for consistent long-term success in meeting our clients' objectives.


Risk: We seek to minimize the risk of a permanent loss of capital in a portfolio.  The term "risk" is itself ambiguous, its measurement imprecise, and its meaning varied from person to person.  Risk cannot be avoided, but it can be considered, estimated, and minimized within limits. We do our best to guard against all manner of possibilities, accepting that more things CAN happen than WILL happen.   
Long term: One market cycle typically takes 5-7 years - we think of long term as spanning the range from one market cycle to the 30+ years needed to manage a retirement portfolio.   
Broad Market Returns: These are the returns on investment of major stock market sectors - the S&P 500 for large companies, the Russell 2000 for small companies, the MSCI EAFE for international companies and the BARCAP Aggregate for US corporate bonds.  We benchmark our portfolio's risk-adjusted returns against any one index, or composites of indexes.

Education.  We believe education will protect shareholders and enhance desired outcomes.  We think it's critically important that you understand the basic guidelines we follow when we invest your money.  RJM believes that good investing, like good health, is practiced by following broadly accepted, fundamentally sound practices, largely enumerated above.  I/we believe further that following these practices will maximize the likelihood of a favorable outcome.  RJM recognizes that most clients feel at a disadvantage when discussing and evaluating investments. Rather than mystifying clients to maintain some false aura of expertise, I prefer to spend  time in each meeting reviewing aspects of investment selection and portfolio construction and explaining how these fundamentally sound practices contribute to your investment goal.  Reading your report commentaries, special commentaries, and past economic and market outlooks posted on our website may provide added confidence in the soundness of our investment approach.  Patience and confidence are critical to staying the course in difficult times and avoiding a panic response to market chaos.  Only through education and understanding will you gain confidence in the investment approach of your advisor and the safety of your money. The good news is that "fundamental" is just that: basic, critically important, and grounded in common sense.  Fundamentally sound investing is not rocket science, it is easily learned when logically presented, and will increase your peace of mind and reduce your anxiety over risk of loss.  Our experience has been that through repetition and reinforcement in successive meetings, each client will gain the understanding and confidence that increase the odds of reaching the desired results.

  RJM endeavors to serve as trusted advisor in a collaboration on all matters financial.  We want to work WITH our clients on their portfolio and related financial concerns, not merely FOR them.  An important aspect of this is remaining fiercely independent, generating our own investment research and declining to be wined and dined by fund wholesalers or brokers with a separate agenda.  This independence is essential in maintaining our position as fiduciaries, acting in the best interest of our clients.  Commissions, bonuses, special awards, etc. always alter the quality of objective advice, and therefore are never accepted regardless of source.  Working together often means 10 or more meetings over the course of the first year as we sift through all the details of a client's financial life.  This intensity is requisite to getting our collaborative effort off on the right foot, ensuring that we have a complete and thorough understanding of a client's situation and can tailor a solution to that situation.  Clients who have been through this thorough review and discussion of alternatives usually stay with us over time, a win-win relationship for both. 

Risk.  Understanding, or perhaps more accurately, better appreciating risk is fundamental to understanding RJM's investment philosophy.  Risk cannot be eliminated, although specific risks can be reduced within limits.  Investment gains come with investment risk.  Every investment choice entails risk of some kind.  For example, if you don't like the stock market and choose to invest in cash instead, you still have risk posed by inflation.  If inflation increases, the value of your cash falls, and the value of those stock investments that you initially didn't like may begin to grow.  Every investment choice, including choosing to do nothing, involves a trade of one risk for another.  Gains come with risk.  The trick is to minimize the risks so that adequate gains are possible and investment goals are reached.  On a portfolio basis, we seek to minimize the myriad investment risks so as to avoid a permanent loss of capital.
On an individual, personal level, risk tolerance is different for every investor.  We work hard to assess each client's risk profile with the use of professionally designed and scored risk assessments, and with a discussion-based questionnaire designed to illustrate and facilitate understanding of risk/return characteristics.  We believe it’s important to distinguish between risk tolerance and risk capacity.  Risk tolerance reflects one's attitude toward variation or volatility of returns, while risk capacity reflects one's financial ability to absorb loss.  For example, if one is retired with substantial assets, one has a greater capacity for loss; even a major decline in total assets won’t leave such a client without an adequate income.  Frequently for this comfortably retired individual, tolerance for volatility, that is tolerance for large variations in portfolio value, is very small because a declining balance generates great anxiety.  This person has a high risk capacity but a low risk tolerance. Conversely, many people who retire with marginal assets and a low capacity to absorb losses are all too tolerant of investment risk.  We believe people nearing retirement or recently retired with marginal assets need to save aggressively and invest cautiously. This is not the time to increase investment risk in the hopes of winning big, for there is no time to recover from poor investments or poor planning. 
Volatility - is not a measure of risk, but an unreliable indicator of risk.  Consider the year 2007 just before the market began its decline of nearly 60% by March of 2009.  By October of 2007 volatility had diminished steadily for nearly three years, and was almost 25% below its historical average.  If one used volatility as a measure of risk, an investor might have felt confident in adding weight to their stock holdings as the market moved steadily closer to the edge of the cliff.  Managing volatility is not an objective of RJM, but it has proven to be a natural by-product.  High volatility results from, and creates, extreme price movements. These price movements may often lead an investor to sell at the very worst time: when he or she should be buying.  We believe our clients must be aware of how they may react to high price volatility, keep a clear distinction between market price and intrinsic value, and understand that over the course of a market cycle the intrinsic value of their investments will likely be recognized and reflected in the balanced returns of their portfolio.  Although we do not directly manage to reduce volatility and can offer no assurances, we believe our approach increases the likelihood of having a smoother ride than that of the market.  We hope that our cautious strategy will continue to prove sound and result in portfolios that consistently retain greater value than the market during market declines., Such results, coupled with continuous communications with you, will allow our clients - at a minimum - to maintain their confidence in our approach.
Mutual funds.  We use actively managed mutual funds as a primary investment choice to gain several powerful advantages:  professional management, diversification, transparency of operation and reporting, and a measureable track record.  We seek experienced managers with long successful tenures and significant personal investments in their funds.  We believe such funds and managers offer the best combination of downside protection and adequate long-term gains available.

Modern Portfolio Theory (MPT).  We embrace the theory that a portfolio's allocation, or balance of cash, bonds, and stocks, is more important than the specific bonds and stocks selected.  We attempt to create a portfolio unique to each client's target of return on investment and risk profile so as to minimize risk and maximize long-term gains. We then seek to find the most consistently successful active fund managers to increase the likelihood and degree of investment gains.  No two clients have identical portfolios because no two clients are exactly alike.

Fundamentally Sound Investing. The soundest investing is most often found when fund managers have significant personal investment in their funds; when a fund's expenses are below category average; when great returns on investment are accompanied by consistently low turnover;  and when these criteria have been present throughout a fund's ten-year history with the same manager.  These are primary conditions that must be present for fund selection.  For the advisor, fundamentally sound means understanding and applying basic elements of Modern Portfolio Theory, avoiding conflicts of interest inherent in the use of commissioned investments or products, and following "best practices" in all aspects of investment practice as outlined by the Accredited Investment Fiduciary (AIF) program.

Value Investing. Value investing can be described as a defensive orientation to investing. A value investor seeks a "good buy," usually available when the stock of a company is temporarily depressed by market conditions or other events and can be purchased "on sale."   RJM builds "value"-oriented portfolios centered on value-oriented mutual funds because a value investment approach is defensive, and we believe a solid defense to be the best means to preserve capital and consistently provide adequate returns on investment over the long term.