Investment decisions at LMC are made through an Investment Committee process and all security selection is based upon our own research. By utilizing various analysis techniques, we determine which securities to purchase and sell for each client.

We will work with you to determine the appropriate allocation between equities, fixed income securities, cash equivalents and other securities. Equities generally serve to provide growth opportunities within the accounts, while fixed income securities can be used for capital preservation and income generation. For clients in retirement, or for clients with considerable assets, it is very important to take advantage of the benefits that fixed income securities offer.

LMC does not invest in Mutual Funds or Exchange Traded Funds (ETFs). It is our feeling that such investment vehicles do not offer the best solutions for our clients. (Please see Resource Guide for information on why we do not invest in Mutual Funds or ETFs)

Equity Selection

We are value-oriented investors with a contrarian approach. We generally look for out of favor stocks that we believe to be undervalued in comparison to the general market.

When evaluating stocks, we take into consideration historic, present, and near future measures.  These include sales, earnings per share, dividends, as well as the company’s outlook. LMC typically targets companies with low relative P/E, P/S, and P/B ratios that have shown an ability to produce positive free cash flow and earnings. Sectors often considered for investments include Financials, Insurance, Medical, Pharmaceuticals, Utilities, and Technology.

When a potential equity is identified, an assessment is made as to whether the current price of the security accurately reflects its outlook. If the security appears underpriced relative to its potential future value, an estimate is made as to the risk involved in purchasing the security. We are opportunistic and look to purchase when our research identifies a position with an appealing risk/return profile. The stocks that we purchase are generally for the long-term, although stocks will be held for a shorter time if fundamentals change dramatically.

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Fixed Income Selection

Having a portion of one's assets allocated to fixed income is important for many clients. Doing so serves a number of different purposes from reducing the volatility of an account, to providing the income necessary to support one's lifestyle in retirement. Account volatility is reduced because bonds tend to experience less price movement in comparison to stocks. Reducing volatility is of particular interest for people who are in retirement and cannot replace the assets they have accumulated, as well as those for whom safety of principal is a primary concern. Through years of experience, our strategies for fixed income investment have proven particularly successful.

Fixed income is composed of municipal bonds, treasuries, corporate bonds, and agencies. These can be broken down into two classes: taxable and tax-free securities. One important factor to consider when making the decision to invest in taxable versus tax-free investments is the taxable equivalent yield to the investor.

Taxable Securities

Taxable fixed income investments utilized by LMC include treasuries, agencies of the U.S. government, corporate bonds, and taxable municipal bonds. The allocation between the four available choices is determined by the client’s risk profile and current offerings available in the market. When purchasing corporate bonds, we look for investment grade (BBB) or higher quality investments. By utilizing treasuries, returns in excess of money market funds can be achieved. Treasuries are one of the most liquid and safe investments that can easily be converted to cash if necessary.

Tax-Free Securities

Municipal bonds play an important role in the generation of tax-free income in otherwise taxable accounts. Income from bonds issued within the client’s state of residence are generally free of both state and federal income taxes. If the recipient of the income does not live in the state of issue, the interest may be subject to state income taxes only.

Municipal bonds come in two general classes: rated and non-rated. It is the strategy of LMC to purchase non-rated to AAA insured bonds.

Investment Committee

All investment decisions are generally made through an investment committee. The investment committee is comprised of the portfolio managers and the principal of the firm, Norman Lehrer. The committee determines which securities to purchase and which to sell. It is then up to the portfolio manager to determine if the security is appropriate for a particular client's portfolio. This decision is based upon individual portfolio strategy and risk assessment. The portfolio manager also determines when a position should be sold for a client. (For more information on how we construct the client’s portfolio please see Portfolio Structure.)

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Research

LMC conducts its own research when determining which securities to buy and sell. Technological, economic, and financial information is used as sources to provide a general background for anticipating and analyzing the performance of the security markets. Other sources utilized by LMC include the Internet and periodicals, such as The Wall Street Journal, Barron’s, Forbes, and Value Line. Corporate quarterly and annual reports, and research reports from various stockbrokers are also reviewed.

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