Frequently Asked Questions
 

Q: What is “active” asset management?
A:  Active asset management is the purchase and sale of equity investments at the times and prices believed to be most advantageous.

Q:  How does AAM differ from management provided by other financial advisors?
A:  Financial advisors typically provide a more passive form of asset management, they are more like financial administrators.  Their approach is to divide your portfolio up amongst a variety of mutual funds, then your account is reviewed at specified intervals, such as quarterly, where the allocation of assets amongst funds may be mixed.  Their philosophy is that no one can beat the market, so the client’s assets are placed in a broadly diversified group of funds and the returns will roughly reflect the overall market. We actively manage clients portfolios, purchasing and selling equities at what we consider the most favorable time, not at a specified review date.

Q:  What is the investment philosophy of AAM?
A:  Contrarian, we do not follow the herd.  We purchase equities that we believe represent above-average value.  Value is our primary criteria.  We utilize technical indicators to execute transactions at what we considerable the most favorable times.

Q:  What are the goals of AAM?
A:  The goal of AAM is to provide returns to clients that are superior to indexes or passively managed accounts.  There is no guarantee that we will achieve our goal.  We believe that going forward from 2002, for the next 15 to 20 years, the passive approach of buying and holding the overall market will provide mediocre returns at best; and it is worth some measured risk to manage equity investments proactively and prudently as the markets move primarily sideways.  Buy and hold only works when the market is going up.  To have reasonable hope of growing wealth going forward, we believe it is necessary to take a more proactive approach.

Q:  How long are positions held?
A:  There is no predetermined holding period for an investment.  We strive to take advantage of the greed vs. fear cycles of the market, buying what we believe is undervalued and selling what we believe is fully valued or overvalued.  The holding periods may be days, weeks, months, or years; whatever is considered to be most prudent. 

Q:  Does AAM receive any compensation from the firms that custodian clients accounts?
AAM does not receive any compensation from the brokerage firms that custodian accounts.

Q:  How are fees paid to AAM?
A:  At the beginning of each calendar quarter, AAM will invoice your account.  That amount will be deducted from your account for payment to AAM.

Q:  Can I login to my account and view the same information as AAM?
A:  Yes, you can login via the Internet and access your account.  The net effect is that the both the client and the advisor can access your account.  As your advisor, AAM has trading authorization.  AAM cannot withdraw any funds from your  account.

Q:  How will I know when there is activity in my account?
A:  An electronic trade confirmation is sent to your email address whenever there is activity in your account.

Q: Does Active Asset Management purchase and sell mutual funds in clients accounts?
A: AAM does not utilize mutual funds.  Read here for more information.