Key Tenets of the Bragg Investment Philosophy

A research-driven, transparent process delivers the highest likelihood of success over time.

Our portfolio management philosophy and process are intuitive and easy to understand. There is no obscurity; we believe it is important for our clients to understand how we construct and manage the portfolio and importantly, to understand our philosophy which drives the process.

Humility is our greatest strength.

We acknowledge that we can’t see the future and we distance ourselves from people who claim to be able to do so. Humility is a critical component of our success, underlying many of the decisions we make as we manage portfolios. It results in our having a healthy respect for the market. The market is efficient; it is hard to beat the market and even harder to time the market. We won’t trade frequently, we won’t load the portfolio with a handful of our “best ideas” and we won’t rotate among sectors or asset classes.

Keeping it simple serves our client.

Media sources make investing look very complicated. It doesn’t have to be this way. We believe there are only a few places to store our wealth for the long term. These include cash, bonds, stocks (publicly-traded), stocks (private equity), and real estate. While one might own a mutual fund, hedge fund, LLC interest, annuity contract, or ETF, these vehicles are truly “Wall Street packaging” in our view. And often this packaging is quite expensive and designed to appeal to an emotional investor. Look inside the packaging and in most cases, you will find cash, bonds, stocks, and real estate. At Bragg, our goal is to work with our client to determine how much of each of these asset classes to own and then to own them as tax-efficiently and at as low a cost as possible. Our reporting likewise is simple and transparent. Performance is always reported net of all fees. Clients can quickly find the answer to the question, “How did my portfolio perform?”

Stock ownership creates wealth over the long term.

A share of stock is much more than a piece of paper; it represents true ownership in a business. In its simplest terms, investing in stock over the long term is an investment in people … a belief that given an opportunity and an incentive, people will make progress. Owning stock allows us to share in this phenomenon. Over time, the returns our clients expect from their portfolios will be generated by our investment in stocks. The fixed income (bond) component of the portfolio exists to create liquidity, cash flow and a much-needed buffer when stocks are volatile. While fixed income is a necessary portfolio component for most of our clients, we don’t own it for growth; the growth will come from the stock ownership.

Diversification is key.

Bragg portfolios are extremely diversified. Never will we make a significant “bet” on a particular sector or specific security within the portfolio. If we are wrong with our “bet,” the results can be disastrous for our client.

Low costs are critical to net return.

Client returns are net after fees. To the extent we can construct and own a lower-cost portfolio, the savings accrue to our client. As an independent firm, we have access to the universe of securities and this allows us to assemble a very low-cost underlying portfolio.

Taxes are the highest cost.

Bragg will not make a trade without considering the tax impact of the trade on the client. The compounding effect of deferring taxes is significant over the long term. Our investment committee has developed a robust process for minimizing taxes using tools including tax-loss harvesting, matching losses with gains, and asset location (owning tax-efficient securities such as individual stocks and municipal bonds in taxable accounts while owning less tax-efficient securities such as high-turnover mutual funds and taxable bonds in tax deferred accounts).

Discipline wins, emotion loses.

The client’s investment plan is informed by the client’s financial plan. Portfolio holdings reflect the client’s need/desire for return, comfort level with risk and importantly, the need for liquidity. Investing in stocks can be risky; volatility and significant market declines are expected from time to time and history has demonstrated that many investors make costly, emotional decisions when markets decline. We make a significant effort on the front end to be sure the client owns a portfolio that is appropriate. We then manage the portfolio with great discipline and leave emotion out of the process.