Investment Management

We believe the single biggest decision in the investment decision-making process is: how much do you allocate to stocks relative to other asset classes? Generally speaking, stocks tend to have positive returns when the economy grows. As such, our investment strategy hinges on our macroeconomic forecast: what is the economy likely to do in the near future? After all, you have to know where you are going.

So, what are its strongest elements or industries, and what is the likelihood for future corporate profitability? History shows, significant, long-term bear markets and economic downturns are usually predicated by a financial system panic of some sort. Not surprisingly, there is a strong correlation between the magnitude of the financial crisis and the depth & breadth of the bear market. Since financial panics are relatively rare, we are ordinarily predisposed to be market or overweight stocks relative to fixed income, all other things being equal.

Some of the tools we use to effectively invest our clients’ assets are:

Analyze Economic Data

  • Consumer Releases
  • Industry & Business Releases
  • Government Releases
  • International Data

Review Monetary Policy

  • Reserves in the banking system
  • FOMC bias & recent actions

Review Demographic Trends, Domestic & Global

Conduct Yield Curve & Sector Analysis

Monitor Global & Domestic Political Environments

Investment Purpose

Our investment purpose is to develop high-performing investment strategies which correspond with the client’s goals, time horizon, and tolerance for risk. We do our best to incorporate our client’s entire financial picture, not just those assets at Oakworth.

Primary Investment Objectives

While Adhering to the client’s unique investment parameters, our overriding investment objectives are:

  • Preserving the principal value of the dollars invested
  • Providing a readily available source of liquidity
  • Generating a competitive rate of return

Investment Strategy

Our investment process starts with an economic forecast and ends with a well-diversified investment portfolio.

Step 1

Developing a Macroeconomic Forecast

  • Is the economy going to grow, stagnate, or contract?
  • What does the economic data suggest?
Step 2

Broad Asset Allocation Targets

  • Based on our forecast, do we overweight stocks, bonds, or cash?
  • Stocks tend to outperform when the economy grows.
Step 3

Setting the Asset Class Targets

  • Do we favor domestic or international? Small or large cap? Etc.
  • Domestic stocks tend to do well when the dollar is strong.
  • Small cap stocks outperform when the yield curve is steep.
Step 4

Economic Sector Weightings

  • Where are we in the economic cycle? Should we overweight financials, technology, or utilities, etc.?
  • For example: Financials tend to perform better at the start of an economic recovery.
  • Technology does best when the economy is in expansion.
Step 5

Selecting the Individual Securities

  • What is the most effective way to invest? Individual securities, exchange traded funds, or mutual funds, etc.?
  • Is there an individual company which offers the best potential for return in the sector/class? Or, would it be more efficient to use a fund of some sort?
Step 6

Deciding the Appropriate Time to Invest

  • Is now the right time to buy? Should we invest now, wait a little while, or average into the markets?
  • Has the market been extremely volatile? Has it been unusually stable? Is there any ‘big news’ coming up which could impact the markets, etc.?