Philosophy & Strategy

Lodestar’s overall investment approach is geared toward generating strong long-term investment returns, without assuming undue portfolio risk. We believe that investment portfolios should be custom managed to meet the specific investment goals, risk tolerances and other constraints that are unique to each client.


Lodestar’s research and security selection process is focused on generating positive long-term results. Our equity investment style employs a disciplined approach that focuses on value and high quality. We seek undervalued stocks that can be held for long periods of time. High grade bonds with short to intermediate-term maturities are utilized for the fixed income investments.

Identifying stocks for the long-term

Lodestar’s equity investment style employs a conservative and disciplined approach to stock selection, focusing on owning high quality, undervalued stocks. Utilizing a team approach, our portfolio managers screen databases for companies that meet certain value and quality criteria. These measures include, though are not limited to, relative and absolute price/earnings and price/cash flow ratios, dividend yield levels and financial strength. Companies that meet our criteria are then rigorously analyzed from a fundamental perspective. 

When to sell

Stocks may be sold when we observe deterioration in business fundamentals, overvaluation relative to historical parameters, or for portfolio reallocation purposes. Technical analysis may be used as a secondary process for timing purposes. Additionally, tax considerations, where appropriate, are evaluated with respect to any sale transaction.  

Finding the right bonds

The fixed income portion of a client portfolio is conservatively managed for capital preservation and current income. Fixed income securities include U.S. Treasury and government agency securities, high grade corporate bonds and tax-exempt municipal securities. Our emphasis on identifying and including high quality bonds with short to intermediate-term maturities (less than 10 years) is an important factor in achieving our client’s fixed income objectives.

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Lodestar’s planning and portfolio management strategies focus on two overarching issues: 1) achieving consistent investment returns without exposing investors to uncomfortable levels of risk and 2) striving to ensure that sufficient resources are available to meet financial goals, both in the near and longer term.

These two issues greatly influence not only how your portfolio is initially structured, but how it is subsequently managed over time. The following is more specific information behind our management strategies:

Asset allocation & risk

The asset mix between stocks, bonds and cash is determined based on the investment goals, risk tolerance and any other pertinent considerations and constraints of each respective client. Anticipating a variety of hypothetical market scenarios can be helpful in the process of determining the appropriate level of risk that should be assumed for a particular investor.


Portfolios are diversified across market sectors and industry groups, with over and under weighting to an industry or sector being a function of valuation and secular shifts in the economy. The equity allocation will typically have 20-30 stock positions and may include mutual funds or exchange traded funds (ETFs).

Fixed income
Bond selection is a function of the relative valuation between sectors of the fixed-income market based on historical parameters. We view the fixed-income portion of a balanced portfolio as having a considerably lower risk profile than that of the equity allocation. 


Portfolio rebalancing between stocks, bonds and cash occurs with changes in the client’s risk tolerance, investment objectives and market conditions.

Limited portfolio turnover

Because we are long-term and patient investors, Lodestar strives to limit portfolio turnover. Historically, equity turnover within client portfolios has generally been less than 20% annually.


A central premise of Lodestar’s investment philosophy is that no two investors are exactly the same, therefore no two portfolios should be exactly the same. Thus, we do not adhere to a model or cookie-cutter approach. Rather, each account is custom managed based on the unique needs and considerations of the particular investor, as well as the investment opportunities available.

Our clients have differing goals, time horizons and risk tolerances, thus the portfolios we manage vary with respect to asset allocation and security selection. Setting clear and realistic expectations in order to achieve specific financial goals while maintaining an acceptable level of risk is essential to the planning and portfolio management process. 

Your planning strategies may include the following elements and proven methods to preserve and grow money over time:

  • Owning shares of high quality companies with solid business franchises that have temporarily fallen out of favor and offer excellent long-term value
  • Focusing on growth of capital to offset the negative impact of taxes and inflation
  • Produce a growing income stream while protecting accumulated assets
  • Developing a plan for systematic and sustainable cash withdrawals to meet ongoing needs
  • Investment strategies that optimize the interplay between taxable personal portfolios and tax deferred retirement accounts

Our investment professionals regularly work closely with our clients’ other advisers, including estate attorneys and tax accountants, to ensure that planning strategies are effectively and successfully coordinated.

“A goal without a plan is just a wish.” 

Antoine de Saint-Exupery