67 WALL STREET, New York - December 4, 2012 - The Wall Street Transcript has just published its Global Investing Strategies Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Global Investing - Investment Risk Management Strategies - Emerging Market Growth Dynamics - High Quality Companies
Companies include: General Motors Corporation (GM), Toyota Motor Corp. (TM), Procter & Gamble Co. (PG) and many others.
In the following excerpt from the Global Investing Strategies Report, an experienced asset manager discusses his risk balancing philosophy for investors:
TWST: Please tell us about the relationship between Choate Investment Advisors and the law firm of Choate Hall & Stewart, and why that creates an advantage for clients.
Mr. Millay: It's a very close relationship. We are a subsidiary of Choate Hall & Stewart, and we provide the investment component of Choate's family office. The term family office is one that's being used a lot now in our industry, but it's also being misused quite often. The real definition of a family office is the integration of legal advice, tax advice and investment advice in a holistic fashion, where everything is coordinated and seamless for the client. That's what we're doing and what sets us apart from many other firms.
TWST: Why is it so important to examine a risk when you are constructing a portfolio, and how does Choate manage risk?
Mr. Millay: We put risk at the center of our investment process. The first decision that we make with clients is how much risk to take. We think that that's the most important decision that any investor makes. The reason it is important is because there are really two definitions of risk. One is volatility, which is how much the portfolio fluctuates on a day-to-day, week-to-week, month-to-month, year-to-year basis. But the real definition of risk is the permanent loss of capital, which we absolutely seek to avoid, that happens by taking too much risk. If you have a moment when the portfolio is down, and in that moment you have to abandon risk to seek safety after you've already had an investment loss, you basically are never going to recover from that loss. It is really important for us that our clients take no more risk than is appropriate for them.
But we also recognize that there is no return without risk. Just as important as not taking too much risk is not taking too little, because the risk that you run is that, over time, your capital will not appreciate enough to meet your goals. So there are two sides to it. One is making sure that we don't take too much risk, so that we never expose our clients to a situation where there's a permanent impairment of capital, but the other is making sure that we take enough risk to generate the return that is required. That is the balance that we strive to attain for each of our clients.
TWST: What are some of the factors in determining what is the right amount of risk for a client?
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.