Our Investment Philosophy
As individuals, each of us is unique. But when it comes to investing, while we each have distinct investment objectives, we tend to fall into two general groups for the core of our portfolios - investors adopt either an actively managed or passively managed investment approach. Why do we strongly recommend you adopt a passive approach?

An Efficient Debate
A long-standing debate about the stock markets has been whether or not they are "efficient." The Efficient Market Hypothesis (EMH) is the basis for the body of academic work known as Modern Portfolio Theory, upon which the American Law Institute built its prudent investing guidelines for trust fiduciaries.
EMH states that markets quickly and accurately reflect available information, and are setting "fair" prices for buyer and seller. Inefficient markets, in contrast, would enable a savvy investor to exploit security prices that do not accurately reflect all available information or do not respond quickly to new information.

Few would argue either extreme - that markets are purely efficient or inefficient. But those who actively invest believe that markets are at least inefficient enough to make it worth the treasure hunt. They will pay the costs involved in attempting to find miss-priced stocks, bonds, sectors or markets to buy and sell. Instead heeding the academic evidence, the conclusion is that markets are too efficient to allow investors to consistently overcome the costs involved in identifying potentially miss-priced securities.

By accepting the Efficient Markets Hypothesis as fundamental to your investment strategy (whether "you" are an individual, family or retirement plan), you don't have to spend time chasing the very few miss-priced securities that might occur. Instead, you can focus your efforts on:

• Defining and incorporating an appropriate amount of risk within your investments
• Capturing as much of the market returns as possible given your risk tolerances
• Minimizing costs that might otherwise detract from your returns
• Periodically rebalancing your portfolio according to these guidelines
• Spending your leisure time pursuing your life's interests, rather than trying to predict or react to every market fluctuation.
• To learn and understand more about how Northstar Financial Planners, Inc. invests portfolios and the academic approach we use we invite you to call and set up an appointment to discuss your portfolio.
• To learn more about Modern Portfolio Theory and how it applies to investing please go to www.dfaus.com.