Investment Management
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The portfolios we manage are built with a long-term horizon and a focus on diversification. We do not make short-term trades based on the day to day fluctuations in the market. We prefer to spend our time identifying the asset class and security mix that will provide the highest total return over the entire investment cycle.

We believe that by having exposure to different areas of the financial markets helps minimize risk and maximize long-term total-returns. The core of our portfolios rest in a mix of high-quality fixed income securities and a portfolio of thoroughly researched equities.

We encourage you to learn more about what influences our portfolio construction process and how we select the equity and fixed income securities to include in the portfolio.


Investment Management | Custom Built Portfolios

When building your portfolios we take into account both quantitative and qualitative aspects of your personal situation. We recognize that there is an art to balancing the quantitatively optimal portfolio with a portfolio mix that you, the client, can handle. Quite simply there is a balance between understanding one’s willingness to take risk and their ability to do so.

After working with the client to identify an asset allocation plan we then turn to their unique investment circumstances. Many of our clients have unique circumstances that need to be worked around. We encourage you to read below to understand many of the challenges that we frequently deal with.

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Tax Consequences

Taxable portfolios are frequently burdened by low-cost positions with significant embedded capital gains.  These positions may represent a significant portion of the portfolios value.  In these situations developing a well thought out tax-sensitive plan is crucial.

Legacy Holdings

Long-term holdings inherited from family or those with special meaning present many of the same issues as tax burdened securities.  We work with clients to understand the risks in holding these positions and the opportunities to further diversify their portfolio.

Held-Away Assets

A crucial part of our planning and investment teams working together is the ability to incorporate assets not managed by BCM.  While many view their assets in “buckets” we prefer to take a complete view.  This allows us to compliment what is being done elsewhere (real estate, other liquid investments, business interests) to build an investment portfolio that fits into the greater whole.

Real-Estate Holdings

For many, especially those in California, real estate typically represents the largest single asset in someones portfolio.  We view equity in your primary residence as a unique asset.  This is something you own regardless of investment returns and should be protected.  However, rental income is an asset that should be considered when building an investment portfolio.

Employment Implications

Employment has a major impact on the ability to take risk.  For those in professions with volatile or lumpy incomes a more conservative investment approach may be appropriate.  Conversely, those with stable incomes have the ability (but perhaps not the willingness) to take additional investment risk.  We also work with clients who have stock option packages to diversify their dependence on this single source of wealth.

Income Needs

At some basic level we all need income to survive.  However, the reality is the majority of our spending is discretionary.  By working off of a financial plan we are able to identify the income needed to provide for necessities and aspirational items.   From there we can work to identify investment strategies that help meet these needs.


Investment Management | Stock Selection

Independent in-house research is the heart of our stock selection process. We favor companies with strong competitive advantages that produce strong cash flows. We believe that companies that are have above average cash production are able to produce superior long-term returns.

At Boltwood Capital Management we believe that a mix of 30-40 stocks provides sufficient diversification while keeping our clients’ capital invested in our best ideas.

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There are approximately 6,000 individual companies listed on public stock market exchanges in the United States. We begin our investment process by eliminating the smallest of these companies by focusing on the companies that comprise the S&P 1,500 index which covers 90% of the market capitalization of the domestic stock markets.

Because we are only interested in owning the best of this smaller universe we employ a proprietary factor model to narrow the list even further. Our model scores each and every company on 25 unique factors in the following areas: Valuation, Earnings Quality, Balance Sheet Strength, Dividend history, Market Sentiment and the companies’ growth prospects.

We have a steadfast belief that best in class companies with strong competitive advantages are able to outperform their peers over time. Companies such as these generate high levels of cash flow, return earnings to shareholders and pursue strategic growth opportunities. Our model uses the factor(s) in the areas described above to narrow our list to a manageable 250 companies.

This narrow list of the best companies provides the basis for which we build our portfolios. Every company added to our clients’ portfolios undergoes a intensive examination by our Investment Committee. To be included in our portfolios a stock must pass with universal approval.

We are investors not traders. Consequently, the stocks in our clients’ portfolios are held for an average of 5 years with many held for significantly longer periods. By buying companies at the right time and allowing there best in class business models to perform we believe that portfolios benefit in two ways.

First, portfolios get the benefit of the cream rising to the top. Second, these high-quality companies tend to be leaders in their fields and have higher degrees of stability during market stress. This combined with the non-correlated asset classes in the portfolio help to minimize losses over time.

For exposure to certain areas of the market we use passive low-cost index funds. While these niche market areas provide important diversification characteristics it is difficult to identify market leaders. For this reason we choose to take a passive approach.


Investment Management | Fixed Income

Fixed income is the primary way we add non-correlated assets to our equity portfolios. In our mind fixed income securities serve two primary purposes. First, they provide a steady stream of income. Second, fixed income holdings lack of correlation with equity markets helps to provide principal stability to the portfolio.

We prefer to own individual bonds as opposed to funds.  We further limit ourselves to owning best in class investment grade securities.  These are typically spread across government, corporate and municipal issues.

We hold the bonds in our portfolios until maturity.  As part of a laddered bond portfolio there are always bonds maturing in accounts.  This allows us to reinvest the maturing bonds at prevailing interest rates.  Because we own bonds until maturity the best representation of expected return is the current yield-to-maturity at the time they are purchased.