Macro-Economic Environment

We consider the following factors, which are often influenced by each other, when looking at the bigger picture:

  1. Economic/Business Cycle—What stage are we currently in (expansionary, peak, contraction, trough)?

  2. Inflation—Are certain global economies experiencing inflationary pressures? If so, will that lead to rising interest rates?

  3. Interest Rates—Is the expectation for rising, falling or stable interest rates?

  4. GDP Growth—Is the country experiencing economic growth or slowing?

  5. Employment/Unemployment Rates—Are employment rates rising or falling?

  6. Interest Rate Yield Curve—Is the yield curve normalized or inverted?

  7. Currency Markets—Are certain currencies gaining in value or declining in value against other currencies?

  8. Commodities Markets—What are the issues affecting commodity prices? Is it increased demand and lack of supply or increased supply and slowing demand?

Sector Analysis

Once we have assessed the macro-economic environment, we focus on which sectors are most likely to outperform given the current economic situation. For instance, certain sectors might perform better than others during the early-to-mid stages of an economic expansion while others might perform better during the latter stage (contraction or trough) of the economic/business cycle.

Stock or Fund Selection

Now that we’ve determined which sectors we’d like to overweight or underweight, we select those companies or funds that appear to be in the best position within those sectors. We are looking for “best-in-breed” companies or funds within these sectors.

Investment Philosophy

What is Our Investment Philosophy?

We take a top-down investment approach to managing our client’s investment accounts. We strive to construct the investment portfolio around what is occurring in the financial markets and where we are in the economic/business cycle. The following flowchart illustrates the progression of our top-down investment approach:

Macro-Economic Environment (Global, Regional, Country)

Sector Analysis

Stock or Fund Selection