Personal Framework


To meet your goals, you need a plan tailored to your circumstances with a budget that allocates portions to savings and investment and has realistic expectations for future returns.​



To meet your goals, you need a plan tailored to your circumstances with a budget that allocates portions to savings and investment and has realistic expectations for future returns.​​

Put Yourself First

Know who is working in your interest, who is working for their own interest, and what you're paying in fees and expenses.​


Financial Markets

Random Nature Of Investment Results

In the short term, it is extremely difficult, if not impossible, to distinguish investment price fluctuations from random variance. Trading based on predicting short-term market moves (market timing) is highly unlikely to help you meet your financial goals.


Efficient Market Hypothesis

Generally speaking, we believe all public information is fully included in securities market prices.

Active Management Versus Passive Management

It is exceedingly difficult to consistently beat market averages, after expenses and taxes, through active management. The probability of identifying active managers ahead of time who will beat market averages appears no greater than random selection.


Academic Underpinnings


Capital Asset Pricing Model - The capital asset pricing model assumes that efficient markets reward investors with returns commensurate with the systemic risk assumed.​


Factors - Investment factors include, but are not limited to, equity/fixed-income portfolio ratios, large/small company distinctions and growth/value company distinctions. From time to time new investment sectors and factors are identified.​


Modern Portfolio Theory - Modern portfolio theory analyzes portfolios as a whole rather than individual component securities.


Keep Your Costs Low

Investors should be very attentive to costs. It is common for actively managed mutual funds to charge 1% or more in annual expenses while passively managed funds frequently charge 0.25% or less. The overwhelming evidence is that mutual fund investment performance is inversely related to the size of the funds' fees. The more you pay, the less you get to keep for yourself.

Life Cycle Investing

Accumulation Phase

It is critical to begin investing a significant portion of income as soon as possible and to invest a substantial portion in equities, which over a lifetime of investing, have historically provided returns superior to fixed income securities. Markets go up and down, sometimes dramatically. It is critically important to plan for this, and to stick to the plan when it happens.


Transition Phase

This is is the trickiest part to navigate successfully and should begin approximately ten to twenty years prior to the spending phase, with periodic updates. It begins with a detailed analysis of spending, income, ability to postpone the spending phase, ability to adapt to fluctuating income, and risk tolerance.

Spending Phase

This phase begins when you stop accumulating and start spending your investments. There are several potential asset components to the spending phase, each with their own risks: equities, fixed income, annuities, Social Security, and pensions. Point Loma Advisors doesn't rely on thumb-rules for spending a particular percentage of assets or for a particular asset mix. We use real data, your own circumstances, and update your plan at least annually. Annuities are sometimes unfairly maligned, but low-cost annuities may help some households meet their retirement income goals.


Financial Technology

Financial Technology (FinTech) greatly enhances the ability to collect, organize and present actionable information at very low cost for human decisions. However, FinTech is the servant and not the master; investors and advisors should never turn over their financial fate or their personal responsibility to the latest software. Point Loma Advisors uses FinTech as a powerful tool to help create, monitor and implement strategic financial plans but does not use it to react to market fluctuations, to facilitate short-term trading, or to provide machine-generated investment recommendations.


The Good News

Stock picking and access to sophisticated investment vehicles are not necessary to meet your financial goals. Once an appropriate financial plan is constructed, choosing the most effective investments is relatively easy. Point Loma Advisors recommends mostly low-fee, no-load passively managed mutual funds.


What Is The Value Of Point Loma Advisors As A Financial Planner Or Investment Advisor?

Just as elite athletes work with a coach, individuals work with investment advisors for an outside perspective of their financial profile and to quickly zero-in on strengths and weaknesses. There is a tremendous amount of free advice designed to move clients into products most profitable to the financial industry. Isn't it better to engage a fiduciary advisor to optimize profit for yourself? Point Loma Advisors offers professional investment expertise at very reasonable rates. Point Loma Advisors receives no commissions on recommended investments; our entire compensation is paid by our clients.​

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Specific Investments


Beating the Market - The essential characteristic of traditional investing (often called active investing or stock-picking) is identifying individual mispriced securities deemed likely to exceed market expectations. This amounts to predicting the performance of individual securities. It assumes that the market is wrong about the current price, but will be right about price in the future, at which time the security will sold for a market-beating profit. There are two sides to every trade, a buyer and a seller, and therefore the market as a whole has an average return. Transactions have costs, managers have fees, and sales have tax consequences. Nearly all peer-reviewed research shows that the chances of exceeding market averages through active trading has no better than a random chance of success after costs. What the data shows for active managers.



Earning the Market Return - A belief in the futility of trying to beat market averages with a traditional investing strategy has led to the rise of index investing (often called passive investing.) If you can't reliably beat market averages, why not seek out the market return of the specific indexes? There are several important advantages to index investing. One advantage is that there are no fees paid to stock pickers. Another advantage is that indexes change slowly, leading to low turnover and low transaction costs. A third advantage comes from the low turnover: annual taxes on profits from the sale of individual securities within the portfolio are lower. Research shows that it is exceedingly difficult for traditionally-managed portfolios to overcome these index-investing advantages and beat the market. Vanguard is a leading provider of low-fee index funds and Point Loma Advisors includes their index offerings in its recommendations.



Academic research has identified specific dimensions for equity and fixed income investments which point to differences in expected returns. Investors can pursue higher expected returns by structuring their portfolio around these dimensions.

Equity Dimensions

Market: Equity premium— stocks vs. bonds
Company Size: Small cap premium— small vs. large companies
Relative Price: Value premium—value vs. growth companies
Profitability: Profitability premium—high vs. low profitability companies

Fixed Income Dimensions

Term: Term premium—longer vs. shorter maturity bonds
Credit: Credit premium—lower vs. higher credit quality bonds

Dimensional Fund Advisors (DFA) is a leading global investment firm that has been translating academic research into practical investment solutions since 1981. DFA funds are available only through selected investment advisors. Point Loma Advisors is pleased to offer and recommend DFA funds to its clients.


Risk vs. Return - Generally speaking, risk and potential return are related. This is the risk/return trade-off. Higher risks are usually taken with the expectation of higher returns at the cost of increased volatility.

Nature of Risk - Every type of investment, including mutual funds, involves risk. Risk refers to the possibility that you will lose money (both principal and any earnings) or fail to make money on an investment. A fund's investment objective and its holdings are influential factors in determining how risky a fund is. Reading the prospectus will help you to understand the risk associated with that particular fund

Potential Losses -It is important to note that no methodology or investment strategy is guaranteed to be successful or profitable. Investing in securities involves the risk of loss that clients should be prepared to bear. In the past, equity markets have declined dramatically without warning. Prudent investors account for this possibility when constructing their portfolios.​



This is a small sample of an extended list of references that supports our philosophy of high quality, rigorously researched, low cost investing. Please contact us for more information.


Burton G. Malkiel, "A Random Walk down Wall Street: The Time-tested Strategy for Successful Investing" updated January 2016.

Securities and Exchange Commission, "Information for the Individual Investor" website. (Lyon Park provides this SEC reference for information only. The SEC does not "approve" or "endorse" any particular securities, issuers, products, services, professional credentials, firms, or individuals.)

Thomas J. Stanley, "The Millionaire Next Door: The Surprising Secrets of America's Wealthy" updated November 2010.​



John C. Bogle, "Common Sense on Mutual Funds" updated December 2009

William J. Bernstein, "The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk" October 2000

Benjamin Graham, and Zweig Jason with Buffett, Warren, "The Intelligent Investor" updated March 2009.

Robert Schiller, "U.S. Stock Markets 1871-Present and CAPE Ratio." Download a spreadsheet with Dr. Schiller's data for Cyclically Adjusted Price-to-Earnings ratio (CAPE).



Eugene Fama and Kenneth French, "The Cross-Section of Expected Stock Returns," The Journal of Finance, Vol.XLVII, No. 2, June 1992.​

Antti Ilmanen, "Expected Returns: An Investor's Guide to Harvesting Market Rewards" March 2011.​

Harry M. Markowitz, "Portfolio Selection: Efficient Diversification of Investments" 1959.

​Jim C. Otar, "Unveiling the Retirement Myth: Advanced Retirement Planning Based on Market History" 2009


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    If you're not ready for a personal conversation, I encourage you to sign up for my email list and receive a copy of 'Inside Investing' for Technical Professionals.If you're not ready for a personal conversation, I encourage you to sign up for my email list and receive a copy of 'Inside Investing' for Technical Professionals.