Investment Philosophy

Jeff Sprowles and Associates, LLC
Fee Only Financial Planner and Investment Advisor

Fee Only Financial Planners and Investment Advisors

Investment Philosophy

The primary component of success in investing is asset allocation. We use a financial model to determine an appropriate mix of stocks, bonds, cash and other investments for each client portfolio. When managing investments for a client, each portfolio is assigned a target for stocks, bonds and cash. Performance is then measured against the similar mix of the Standard & Poor's 500 Stock Index, Lehman Brothers Intermediate Government Bond Index and 90 day U.S. Treasury Bills.

Investments in stocks are made using mostly exchange traded index funds. This is a very cost effective way to obtain diversification by style. We do a small amount of market timing with up to 50% of the stock target. We adjust the mix of stocks by style. At present our default stock recipe is:

                                                        Broad Base Domestic (Russell 3000)           20%
                                              Mid cap                                                           10%
                      Small Cap Domestic                                       10%
                      Alternate Energy                                            10%
                      International Developed                                10%
                      International Emerging                                  40%
                                  Diversified                                5%
                                  Brazil                                        5%
                                  China                                       15%
                                  India                                        10%
                                  Latin America                         5%

We do not want to take market risks in fixed income and cash. For fixed income, we use U.S. Government, Agency and AA or better rated bonds. We buy insured certificates of deposit. We purchase AA or better rated municipal bonds. We keep maturities relatively short, preferring our portfolios to have a duration of less than five years. At Jeff Sprowles & Associates, the method of choice for cash, is money market mutual funds investing in very highly rated and insured securities.

We prefer clients to purchase real estate directly and do not buy REITs. We consider hedge funds and other alternative investments including commodities for qualified investors.