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Black Capital LLC

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Philosophy

Customer Service

At Black Capital, we believe that each client has different needs with respect to their investments due to their goals, investment time horizons, and risk tolerance levels, among other factors. Because of that, Black Capital offers financial planning to its current and prospective clients. During the financial planning process clients discuss their goals and apprehensions concerning the investment process as well as complete a risk assessment questionnaire. This allows us to serve each client's needs differently, as well as gives the client input in his or her investments. During the planning process clients have the ability to direct investments toward or impose restrictions on certain securities or asset classes.

Passive Investing

While we advise clients with regards to all asset-classes (including but not limited to fixed-income securities, equity securities, options and other derivatives, real estate, and private equity investments), we focus on passive investments such as indexed exchange-traded funds and other securities which minimize cost because it is our belief that without extensive research and extremely attentive active portfolio management, the efficient market hypothesis will hold, and on average actively managed portfolios will underperform passively managed investments.

Efficient Markets

At Black Capital, we believe that market efficiency is a very real concept. While it may be possible that there are viable strategies to consistently exceed market returns, these strategies can bear excessive risk for individual clients with goals such as retirement, or college tuition. We believe that trading on traditional fundamental and news-based analyses results in buying and selling securities in which news has already been accounted for in the price. Because of this, Black Capital endorses passive investment strategies in which we attempt to match market returns while maximizing the Sharpe ratio of a client’s portfolio. We accomplish this by purchasing combinations of low-commission ETFs from different asset classes to lower the expected variance of the portfolio. However, investors need to be aware that regardless of how low the expected variance of a portfolio may be, investing in any financial instruments – especially equity securities – carries risk of loss, from slight to significant. While we specialize in low-cost, passive investing, Black Capital also participates in more active strategies. Clients using these active strategies need to be aware that frequent trading can negatively affect investment performance through increased transaction costs and brokerage fees.

ETFs

ETFs (or exchange traded funds) benefit clients by offering investors exposure to a wide variety of assets while giving them instant diversification. This diversification aids in eliminating an investor’s idiosyncratic (or firm-specific) risk, however the investor is still exposed to systematic (or market) risk. This market risk can still be very damaging to a portfolio in the event of system-wide price drops. Holders of lesser-traded ETFs may also bear, along with liquidity risk, tracking (or basis) risk if the fund is not holding the exact securities they attempt to track (this occurs when a fund attempts to track one security by holding other, highly correlated securities). Investors need to be aware of the risks these ETFs bear.