Investment Principles

At Noble Wealth Partners, our investment principles are centered on five key pillars as part of our SMART management framework:

Create a Systematized process, Mitigate downside risk, Apply time-tested principles, Reduce unnecessary costs, and Tailor each portfolio to align with your goals and objectives.

Our clients are unique, with different backgrounds, incomes, tax situations, and investment objectives.   Treating clients as individuals is a core belief of our firm and it shapes our rationale to manage custom portfolios instead of placing clients in a one-size-fits-all solution.  This enables us to focus on your goals, instead of tracking arbitrary benchmarks that may be irrelevant to your financial needs.  We keep you focused on long-term results during periods of market turmoil so you can pursue your lifelong dreams.

A Goals-Based Investment Solution

"Economic agents are human, and economic models have to incorporate that." - Richard Thaler (recipient of the 2017 Nobel Memorial Prize in Economics)

In 1990, Harry Markowitz won the Nobel Memorial Prize in Economic Sciences for the Efficient Frontier Model he introduced in 1952. This model helps create portfolios that maximize returns for each level of risk. For decades, many professional investors have relied on the Efficient Frontier Model as a cornerstone of their investment strategies. However, a significant issue with this model is its assumption that investors act rationally. This assumption has led many investors to follow arbitrary benchmarks that may not be relevant to their financial objectives, as these benchmarks often ignore the human element of investing.

Recently, experts have begun to recognize that individuals may not always invest rationally, and that human behavior can significantly impact portfolio outcomes. In 2017, Richard Thaler was awarded the Nobel Memorial Prize for his assertion that "economic agents are human, and economic models have to incorporate that." If this is indeed the case, our focus should be on investing in alignment with our clients' goals.

At Noble Wealth Partners, we build portfolios specifically designed to meet your financial objectives, rather than simply tracking a volatile benchmark. We believe this approach offers our clients the best chance for financial success.

For clients who qualify for this service, we utilize our proprietary tool to categorize their portfolio assets into specific buckets aimed at achieving designated objectives in a tax-efficient way. This approach helps us mitigate the risk of clients having to compromise their lifestyle. Once we have addressed this aspect, we can concentrate on fulfilling their dreams and enhancing their overall quality of life.

The Investment Process

Noble Wealth Partners uses a systematized process that is both qualitative and quantitative to provide our clients with investment solutions to reach their goals. Some investment managers prefer to examine the global investment landscape and macroeconomic factors using a top-down approach (i.e., the 30,000-foot flyover) before looking at each individual security. Other managers promulgate that alpha (or excess return) is obtained by analyzing each individual security using a bottom-up process (i.e., feet on the ground) prior to looking at the big picture. At Noble Wealth Partners, these decisions are not mutually exclusive. The two approaches are reconciled through a proprietary portfolio construction process to include a combination of the best top-down and bottom-up investment opportunities while remaining cognizant of the risk objective for each client.

Our Process

Formulating Our Capital Market Assumptions: First, we establish our capital market assumptions, which include our expected risk and return inputs for each asset class based on the current investment landscape. In this initial step, we analyze the economic environment, asset valuations, market sentiment, and geopolitical events. This analysis helps us identify the areas within the market where we anticipate delivering attractive returns while effectively managing risk.

Evaluating Areas of Opportunity:  We employ a macro-thematic approach to identify themes that the market may reward. Guided by thorough diligence, we aim to allocate investments across countries, sectors (such as technology, finance, energy, etc.), and asset classes (including large companies, small companies, blue-chip companies, etc.) that are anticipated to offer attractive risk and return profiles.

Portfolio Construction: Client preferences are used to make slight adjustments to market capitalization weights, which help form our strategic asset allocation—essentially our portfolio weightings if we are neutral on all asset classes. From this strategic asset allocation, we further adjust the weights to account for market opportunities, potential risks, relative valuations, the macroeconomic environment, market breadth, and any pricing signals. The result of these adjustments is our tactical asset allocation.

Vehicles to Achieve Our Tactical Asset Allocation: In this step, we identify how to achieve our desired exposures based on our tactical asset allocation. This requires thoughtful consideration of various options, including passive management (such as indexed products), active management, separate accounts, and individual stocks or bonds. These decisions are dynamic, meaning that different market environments may warrant the use of different investment vehicles.

Our Proprietary Process: Our proprietary qualitative and quantitative process identifies individual securities that may provide the best risk-adjusted returns for clients. In this unique process, each security is evaluated based on several metrics, including:

• Subjective Outlook - This metric scores our view on security and the respective position of the company within their industry.

• Analyst Views - Scores the Wall Street consensus including any changes in analyst ratings.

• Valuations - Most of our clients are focused on their long-term goals and a metric that correlates well to long-term performance can be useful. A stock’s price relative to what it should be worth has proven to be a strong indicator of future long-run performance. However, a valuation-based approach rarely works in the short run (1 - 3 years).

• Fundamentals - This score measures how well a security is positioned. It also captures the company’s strengths, weaknesses, opportunities, and threats (Porter’s Five Forces).

• Technicals (chart patterns) - Measuring the durability of the price movement. Technicals can be a good leading indicator as they spot market changes ahead of inflection points where fundamental analysis may fail.

These categories are weighted based on their relative importance to the investment process. The output is our best ideas and the top five securities are bought. The portfolio is diversified around these positions using a combination of active and passive management. Securities are sold if their ranking drops out of the top half. If this occurs, that security is replaced with our top ranked security.

Portfolio Management:  Much like driving, our portfolio management is a forward-looking process.   While driving, it is dangerous to look in the rear-view mirror too long.  Investing is no different, so we do not dwell on past returns and instead focus on the opportunity that lies ahead.   In theory, efficient portfolios (portfolios maximizing returns for each specified level of risk) are constructed by combining only the portfolio assets (and asset classes) that have low correlations with one another.  In other words, own one asset that goes up while another asset may be falling.  At Noble Wealth Partners, we seek to build efficient portfolios to potentially mitigate the impact market fluctuations will have on our client's portfolios. 

Monitoring Your Results: The world is constantly changing, and your portfolio should, too. At Noble Wealth Partners, we rigorously analyze portfolios and their investments to ensure we are comfortable with their composition and performance. We constantly repeat this investment process to equip you with a detailed portfolio capable of navigating the present market environment.

The most important part of this process is that our performance allows our clients to pursue their investment goals.  If our clients are at risk of falling short of their goals, we need to revise the investment strategy, or we need to fix the financial plan.

Disclosures: All indices are unmanaged and may not be invested into directly. No strategy assures success or protects against loss. Investing involves risk including loss of principal. Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. Stock investing involves risk including loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.