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Balanced / Value Investing
Every client brings a unique situation - whether it's managing portfolio risk, recalibrating investment objectives or establishing current / future income requirements. Since 1985 we have been helping clients reach their goals by applying a fundamental Balanced/Value investment discipline to security analysis and portfolio management. At Hayek Kallen Investment Management our mission is to yield a customized solution to meet your individual needs.
Value Investing was introduced in 1934 by Benjamin Graham in his textbook Security Analysis, and followed by the classic, Intelligent Investor. His common sense approach was made famous by modern investors such as Warren E. Buffett and Sir John Templeton. Simply stated, stocks should not be viewed as lottery tickets to be cashed in by the lucky, but as small parts of a business that is for sale. A business, if it is sound, will possess value, and careful analysis will uncover it. To quote Graham: "The ideal form of common stock analysis leads to a valuation of the issue which can be compared with the current price to determine whether or not the security is an attractive purchase."
In order to uncover bargains, value investing demands detective work to identify businesses with high ‘value’ that are priced at a discount - the undervalued stocks. Every business has problems and it is the responsibility of a value investor to identify good businesses that are experiencing temporary problems. If management is addressing temporary problems in a common sense way, and the business provides a valuable product or service that is needed, in the long run the solutions will be reflected in a higher price. The purpose of equities in a portfolio is to provide growth of capital and supplemental income.
When constructing a portfolio we also focus on a proper balance between stocks and bonds, one that is appropriate for you and your investment stage in life. Whether you are in the Asset Accumulation, Asset Preservation or Asset Distribution stage of your investment life, an appropriate balance between stocks and bonds is critical to ensure diversification, income and a proper allotment of risk. Fixed income / bonds add stability and cash flow, ensuring that risk is allocated across assets classes.
When analyzing securities and constructing portfolios we never lose sight of the fundamentals:
- Focus on and understand the risks
- Perform sound, fundamental bottom up security analysis
- Understand clearly client investment objectives and financial needs
- Consider any tax consequences when making decisions
Given that each client brings a unique situation with regards to risk level, investment objectives and income requirements, our approach yields a balanced, customized solution that meets your individual needs.
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