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1991 Crocker Road
Suite 100
Westlake, OH 44145

Call Us: 440-925-3040

Investment Philosophy

Before we lived in bubbles

When Balanced Asset Management was founded in 1989, we invested just like everyone else. We were all taught that if you diversify and buy and hold (hang in there in both good and bad times) you would be successful and reach all of your goals. This worked very well for the decades of the 80’s and 90’s because while the stock markets fluctuated during those 20 years, the trend was very positive. The investment strategy of buy and hold produced solid gains over that time period. Back then, everyone who invested in the stock market thought it was their birth-right to earn 10% per year because they had done so for 20 years.


Then, in March of 2000, the stock market lost about half it’s value over the next two and a half years. The tech bubble had burst. As sudden as a bubble popping, the buy-and-hold philosophy felt as painful as an appendix bursting. Hard working investors were losing the majority of their retirement savings and their children’s college education money. During the next 14 years, the same stock market that averaged 10% per year for the 20 years of the 80’s and 90’s, returned 0% per year. This happened for 14 years!

What Changed?

Why wasn’t buy and hold working any longer? The world had become more global and technology became a bigger part of our lives. It wasn’t all about the United States any longer like it was back in the 80’s. Countries like China were growing at a much faster pace than the U.S. and because of technology, the pace of the world was quickening. Trades could take place on anyone’s desktop. 25 years ago we didn’t hear what happened in Greece and Europe and China on a daily basis. With technology, news from around the world became instantaneous. Financial statements used to come quarterly. Suddenly they could be had on any laptop. Anytime.

We aren’t hanging in there. We’re moving.

In the spring of 2000, Jeff Meissner at Balanced Asset Management decided there had to be a better way than buy and hold or “hang in there, it will come back”. His thought was, why is it set in stone that everyone should pick how much risk they were willing to assume and then continue to keep that same risk level no matter whether the stock market was soaring or plunging. So, he set about developing an investment strategy that would increase the risk of client’s portfolios if the investment world was doing well, but then reduce the risk profile if the markets were doing poorly.

The best offense is a good defense

The challenge was not to try and predict when these changes would occur. That’s impossible. There are no crystal balls. The objective was to react to the ups and downs. This new investment concept had merit but didn’t yet exist. So, for seven years the process was developed and refined. Through trial and error, revising and learning, the Active Strategy was finally ready to launch. Now our clients enjoy the benefits of this innovative investment strategy, which is certainly a defense-first philosophy. We want to protect their assets first and foremost. When we ask our clients “is it more important for us to double your assets or make sure they don’t get cut in half”, most choose the latter.

The drawback of most defense-first investment strategies is that they don’t make money during the good times. They keep focused on the defense. A CD would be an example of this. Our Active Strategy, because we can take on more risk during good times, is able to play both offense and defense. learn more