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FAI's Ten Investment Principles

FAI was founded in 1987 by Mike Martin, when he left T. Rowe Price with the commitment to bring Wall Street to Main Street. For over 30 years we have created diversified portfolios using publicly traded individual stocks, bonds, and funds. Based on our investment experience we developed FAI’s Ten Investment Principles to guide us in investing your savings.

FAI's Ten Investment Principles 

Based on our investment experience we developed FAI’s Ten Investment Principles to guide us in investing your savings:

  1. Know What You Own and Own What You Know –  Many investors get caught in a money losing investment because they never understood why they bought it.  Through the ownership of individual stocks, FAI takes the time to thoroughly understand all the components of the business, the drivers of growth and compelling reason why the company will be a successful investment in the future.
  2. The Only Sure Thing in Investing Is Diversification – Diversification limits downside risk and provides investors a better risk/return outcome.  Diversification can come in many forms.  At FAI, we believe the only way to diversify is to understand what “drives” an individual investment’s price to go up or down.  Owning investments that have different “price drivers” is the only way to truly diversify.  
  3. No Disciplined Investment Strategy Works 100% Of the Time – The goal is to know the difference between a bad strategy and one that is just out of favor.  Our value approach to investing has roots back to the 1920’s and has proven to preserve capital and grow investment returns over the long term.
  4. Market Valuations Alone Should Not Drive Investment Decisions – Market valuations can expand to extremes and alone are not good indicators of attractive asset classes.  We believe that an analysis that combines market valuations, global economic conditions and current business fundamentals has the best chance to guide successful asset allocation decisions.
  5. Investors Should Understand the Difference Between Long-Term Investing and Short-Term Trading – Economics, business fundamentals and valuations help drive LONG-TERM INVESTMENT decisions.  Greed and fear drive short-term trading.  We are long-term investors and can benefit from the greed and fear of short-term traders.  
  6. Market Timing Is Impossible – Nobody has a crystal ball.  Getting out is easy, the hardest part is knowing when to get back in.  No investor can process all of the data needed to try to time the market successfully.  At FAI, we believe a better way to invest without trying to time the market is to own a diversified portfolio and invest for the long-term.
  7. Investing Should Not Be Emotional – Emotions do not help in investing.  Often, especially during times of market stress, investors are better off doing the opposite of what they “feel” they should do to preserve capital and grow their investments.
  8. A Great Company Does Not Always Make A Great Investment – Investors often equate business success with investment performance.  Usually, a firm’s stock performance success occurs well in advance of the company’s financial success.  Studies have shown that the most successful companies often have worse stock performance after they have already succeeded financially.
  9. Be Wary of Media Investment Commentary – Do not let the media scare you out of long-term investing.  Their purpose is to draw viewers and sell advertising.  Save yourself that anxiety and ask our FAI professionals for investment guidance.
  10. A Diversified Portfolio Will Always Contain Winners AND Losers – By definition, a diversified portfolio is made up of investments that are not correlated (rise and fall together).  The goal is for the entire portfolio to produce returns that meet investment goals while reducing risk.  A diversified portfolio can contain “losers” while still meeting these investment goals.
If you are interested in learning more about our Investment and Financial Planning services, please contact our office. See contact information below. We look forward to speaking with you and answering your questions.

FAI Wealth Management | 410.715.9200 | www.faiwealth.com

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