307-586-4279 steve@odonnellwm.com

Investment Philosophies and Processes

by Aug 7, 2019

There are many different philosophies and processes used by professional money managers to construct and manage investment portfolios.

One approach is to look at the big picture, such as the state of the economy, not just domestic, but international as well. This is known as a macro, or “top-down” philosophy. Using a top-down approach, a portfolio manager will look first at the macro economy. He or she would then look to analyze specific sectors, and finally specific companies within those sectors. A macro manager will look for favorable demographics and broad economic trend shifts.

The “bottom up” approach, on the other hand, places the focus almost entirely on individual companies. A bottom-up portfolio manager will look for companies with strong growth prospects regardless of what industry they are in or the impact of broader macroeconomic trends. Some bottom-up managers may focus on low debt levels and price to earnings ratios in their security selection. Others may focus on market share and cash flow. The point is, the bottom-up manager is focused on company specific data.

Our Philosophy

At O’Donnell Wealth Management, we employ a combination of these two philosophies. As fiduciaries, we take our job and our client’s wealth seriously. We are steadfastly committed to putting our client’s interests first. Our mission is to help our clients establish and then ultimately achieve their investment goals and objectives while providing them with exceptional service along the way.

At our firm, we believe that managing risk is more important than managing returns. We believe that the true value of a portfolio manager is revealed during difficult market conditions, not during bull markets. “Don’t confuse brains with a bull market” is the famous saying attributed to Humphrey Neill, the father of contrarian analysis. From his book, The Art of Contrary Thinking.

We aim to construct portfolios for our clients that offer the potential for attractive returns, while at the same time, minimize risk. We are a go anywhere, at any time, money manager. This means that we focus on opportunities. It’s that simple. We are willing and prepared to act on opportunity at any time. We believe sound portfolio management rests on a foundation of due diligence through research. We conduct extensive independent research by comparing and contrasting multiple information sources against one another.

Our Process

Our disciplined approach begins with a discovery process, wherein we compile data to create a comprehensive financial profile that includes all aspects of a client’s financial life. We then develop an investment strategy based on the specific needs, goals and objectives of the individual client. We then implement the strategy.

We spread investments across a variety of industries. We prepare for turbulent economic times by owning companies with business models and balance sheets most likely to survive and thrive in different kinds of economic environments. We will own securities in all different asset classes. We are not tied into a style box. We look for businesses that are in a good competitive position, have good growth prospects and excellent management. We place emphasis on finding long term compounders.

We will buy small, mid and large cap. We will buy growth and value. We will use non-correlative and hedging assets such as precious metals. We will invest in both domestic and international markets. We will hold and raise cash at times. This unrestricted approach gives us the ability to seize opportunity when it arises, and to best serve our clients.

We look for businesses and or sectors of the market that have been out of favor and are poised for an upswing. We like dividends and dividend growth, but we may also buy growth momentum names that pay no dividend. We look for businesses with disruptive technologies and competitive dominance that offer attractive risk / reward scenarios. And finally, we also favor companies that are likely to be acquired or taken over at a significant premium..

The author, Stephen P. O’Donnell Sr., is President of O’Donnell Wealth Management, a financial planning and asset management firm located at 1306 Sheridan Avenue in beautiful Cody, Wyoming. Steve has 18 years of experience, having worked as a portfolio manager for some of the largest firms on Wall Street. For a no cost, no obligation, initial consultation, call 307-586-4279, email, or simply stop by the office Monday through Friday.

Investment Advisory Services Offered Through Saxony Capital Management, LLC. Securities Offered Through Saxony Securities, Inc. Member FINRA/SIPC.

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