McCallister Financial Group

CONNECT

Address:

25200 Crenshaw Blvd., Suite 202
Torrance, CA 90505

Phone:

310-891-0894,800-891-0894 ,

Fax/Other:

310-891-0327

Investment Philosophy

Greece is redoing its financial system, but it is still facing one of five potential (and painful) outcomes.We believe in Evidence-Based Investing concepts. Meaning that the investment strategies we use are firmly based upon Nobel Prize-winning academic research and founded on objective and empirical data. While it may seem obvious to do so, we have found that many investment professionals and individual investors alike follow speculative strategies based upon a hunch, an article they've read, or trust of some so-called expert who has promised to beat the market.

A recent study from Dimensional Fund Advisors1 shows that over the 15 years ending in 2016, only 17% of US Stock Mutual Funds beat their benchmark. This study demonstrates that even professionals hoping to beat the market rarely do.

When investment managers do beat the market, the study suggests it could be luck and that the outperformance may not continue over the long term. In fact, another study by Dimensional Fund Advisors shows that past performance offers little insight into a fund's future returns. Of the top 25% of performing funds from 2007-2012, less than 1/4 of the top performing 25% were still in the outperforming quartile the following year1. We believe that this is why index funds have grown in popularity in recent years.

Instead of speculation, we suggest investments based academic concepts from Nobel Prize-winning researchers, and decisions based on published research of respected academic institutions and researchers. Including, 2012 Nobel Prize winner Eugene Fama, credited as the father of Efficient Market Theory, and 1990 Nobel Prize winner Harry Markowitz, known for Modern Portfolio Theory.

Following their research, we believe the best way to maximize returns is use low-cost asset class and index funds to structure globally diversified portfolios. We believe that your returns will come from how your portfolio is engineered, rather than a manager's skill -or lack thereof- in picking stocks.

Once a well-diversified, risk-appropriate portfolio is created, the most important factor going forward is managing investor behavior. Investor's decisions can have stunningly dramatic impacts on future performance. For instance, instead of sticking with academic research and evidence, investors (and sometimes their advisors), will make decisions based on hunches, a news story they read, or make emotional decisions at market tops or bottoms. Often these lead to poor results. One of the sayings we often quote is: “if your investment strategy involves merely a prediction about the future, your strategy is already broken.”

Recognizing that uncertainty always exists, and since academic studies and our experience tell us it isn't possible to predict the market, we plan for uncertainty rather than guess. Each client's tolerance for risk in their portfolio is different. Age, experience, knowledge, income needs, and many other factors can play into this. Spending time up front with clients identifying their personal risk tolerance is vitally important to designing a portfolio that can create peace of mind and help you reach your financial goals.

1 Dimensional Fund Advisors Master Slide Library

Past Performance is not a guarantee or an indication of future performance.

Check the background of this financial professional on FINRA's BrokerCheck
Check the background of this financial professional on FINRA's BrokerCheck