As business partners since 1987, we have always been cautious investors – pursuing consistent earnings rather than speculative gains (which too often lead to devastating losses). In 1998 the health of one of our clients declined to the point that she required the assistance of a conservator. Her conservator interviewed us to ascertain whether our investment philosophy was appropriate under fiduciary investment laws. Pleased with what she found, she invited us to begin attending the local fiduciary meetings where, she said, we could probably help other fiduciaries needing low-risk investment management. Her presumption proved correct.
In response to the need we found in the fiduciary community, we studied and became versed in fiduciary investment law and Lee began developing a structured investment methodology suitable under that law. Though Lee had considerable success in his efforts using spreadsheets and other traditional software, in 2001, a developer of institutional investment software learned of our specialized risk management style and contacted us regarding a piece of software used, up until that point, only by large institutions. What set the software apart was its unique ability to measure the actual, historical risk of loss of a portfolio, not just the volatility of returns (the traditional measure of “risk”). This was precisely the tool we had been looking for in our investment research.
By year-end 2001, we had developed our first portfolio using the software and began investing client accounts therein. It showed promise of exposing investment accounts to about two-thirds less risk of loss than the broad stock market (about equivalent to that of intermediate- to long-term bonds), yet with substantially higher returns than the equity or bond markets. Our efforts bore fruit in the ensuing years as we honed our abilities and gained expertise in tracking and managing risk. We also became experts on the Uniform Prudent Investor Act and Prudent Investors Network was recognized as the first Premiere Expert of the National Guardianship Association. Today, we continue servicing the needs of public and private fiduciaries and all other investors to whom avoidance of loss is crucial.