We begin from the premise that our clients wish to protect their wealth from the deleterious effects of inflation and to grow their wealth in real purchasing power terms. We believe that these goals are best accomplished through the ownership of domestic and international businesses with the ability to increase their value at a rate exceeding the rate of inflation. We approach investments from the perspective of a business owner and seek to own the stocks of industry-leading companies able to grow in size and profitability through sustainable competitive advantage over a period of years. We prefer financially strong enterprises led by competent and experienced management teams.

Valuation is crucial. We recognize that different valuation criteria apply to different types of businesses and that value can be found in smaller, higher growth enterprises as well as in larger and more mature businesses. Diversification is also a critical consideration in the management of risk, and we avoid undue concentration in industries and individual securities. Company size, industry focus and geographic reach also factor into our risk management considerations.

For many investors, bonds are an important part of the overall investment picture. Carefully selected and strong quality bonds can provide a source of stability to counterbalance the inherent volatility of stocks. Bonds frequently generate a higher income flow than equities and can also provide a source of liquidity to meet client cash needs and to take advantage of equity market opportunities. We lean toward higher quality, shorter maturity obligations in order to mute the price sensitivity of bonds to interest rate changes and to avoid the price fluctuations which tend to characterize long-term bonds. To the extent that tax-free bonds may be advantageous to individual clients, we may suggest use of these specialized obligations and have considerable expertise in this segment of the bond market.