Strategy

Tactical Asset Allocation
Capital Preservation and risk control are of up most importance to SD Baker & Associates and our clients. We have built and tested more than 25 in-house models designed to accurately forecast the future direction of the economy and the downside risks imbedded in the bond and stock markets. These models capture fundamental data, normalized for the business cycle, as well as behavioral data. We view these models as the equivalent to long-range radar, giving us ample time to increase or decrease the risks of our client portfolios before potentially negative financial events occur.

Stock Selection
SD Baker & Associates invests in North American and multinational stocks, bonds, and trusts. The primary investment goal of the company is to find high-quality and growing businesses or assets that are trading at discounts to their fair value. SD Baker & Associates concentrates investments toward a small number of strong business franchises and management teams. Strong business franchises can broadly be described as companies that serve a pivotal and growing role in their respective industries. The ideal company will have strong barriers to entry in a growing industry. Typical barriers would include brand names, economies to scale, superior technology and engineering, and regulatory protection. Strong franchises typically exhibit high returns on capital and free cash flow, recurring and predictable revenues as well as modest or low debt.

Time Horizon
The greatest edge we have is patience and the ability to look beyond the short-term concerns or exuberance which are often a prelude to above-average investment returns. SD Baker & Associates attempts to purchase assets at large discounts to fair value and then hold the investments, often for 2-3 years or more. One added benefit to this strategy is a deferral of capital gains taxes which, over time, adds considerably to after-tax returns.