Investment Team

In order to do this, we use in-house portfolio managers with solid track records to help our clients prudently manage and invest their money.

At Oak Harvest Financial Group, our primary goal is to help our clients achieve their vision for a successful retirement. In order to do this, we use in-house portfolio managers with solid track records to help our clients prudently manage and invest their money.

When we founded OHFG in Houston in 2010, we did so with a vision of serving our clients in a manner different than what had been, and remains, the standard offered in the retail advisory industry.

We recognized a lack of quality retirement planning service within the Houston market. Additionally, we felt there was a need for customized investment management service offerings, which were simply not being met.

In the area of investment management, it was our goal to be able to serve each client individually, providing tailored, customized investment management advice and assistance based on the specific financial needs of each customer.

While that sounds good, we understood it meant nothing unless we took action to back up and support our vision.

To that end, we determined that we needed to be able to offer professional money management capabilities, the likes of which have long only been available to financial institutions, such as mutual funds, hedge funds, ETFs, private equity, banking and insurers.

We set out to identify and bring into the OHFG advisory a group of money managers equipped with the collective knowledge, insight, background and proven track record of managing institutional money for highly respected financial organizations.

That process has taken time and great effort, but we are proud to have assembled an investment management team that meets the stringent criteria we previously identified.

The OHFG investment management team has a combined 75+ years of institutional investment management and capital markets experience across multiple asset classes. Their expertise includes portfolio management, investment research, multi-asset portfolio construction, investment technology, financial planning, and trading.

Why That Matters

We recognized that to best serve our customers, we needed to be prepared to offer customized investment analysis and advise at the individual portfolio level versus the typical approach of simply placing investors into low-cost ETFs that track a variety of indices in order to passively attempt to capture returns.

We are pleased with the approach we undertook some years ago, as it has served our customers and the firm itself well.

But now we see change coming which we believe will have a material impact on customer portfolios and the returns they will potentially be able to capture going forward…likely for some time to come.

This change will require a fundamental shift in investment management strategy. Fortunately, it is one we engage in already and are prepared to help our customers capitalize on.

The Case for Active Management

When it comes to managing portfolios there are two broad approaches – active and passive fund management.

Active fund management involves a strategy in which an individual or team of professional money managers actively manage a portfolio of investments.

The goal is to provide the best returns possible, but from a practical standpoint the active management team is expected to outperform a specific benchmark or index, such as the Standard & Poor's 500®, Russell 3000 and Wilshire 5000 indices.

Passive management is generally defined as a strategy in which a portfolio is constructed to mirror the composition and performance of a specific index, such as the S&P 500. In theory you would obtain the same return as the index. Another way to view this is accepting what the market gives you.

Generally speaking, active managers make buy, sell and hold decisions regarding stocks, bonds, mutual funds, ETFS and other investment instruments using a combination of fundamental and technical analysis, as well as forecasting tools and models, and drawing upon their market knowledge and insight.

There has long been a debate regarding the merits of these two approaches and whether one or the other provides a greater percentage of returns versus risk on a relative basis.

Our View

In our experience we’ve witnessed many episodes of active management underperformance when compared against passive benchmarks, such as the S & P 500. In other words, periods where passive management performed more favorably and made better sense for investors.

Examining periods where a passive management strategy outperformed that of active management, such scenarios have been cyclical in nature, often discernable due to fiscal, geopolitical, macroeconomic or monetary conditions that were present.

We believe the most recent period has been driven primarily by the excessive use of monetary stimulus to lower interest rates effectively to zero, which in turn significantly lifted the stock prices of many companies regardless of investment merit.

Simply stated, this environment rendered stock selection irrelevant and fueled the marketing campaigns that have proliferated in recent years for low-cost “passive” investment products, such as ETFs and Index Funds.

Given the major economic and geopolitical challenges that have evolved in the past several years, we believe the markets are now poised at the cusp of a shift in global monetary policy where differing courses of policy action will evolve.

In our view, this will be the catalyst for the decoupling of stock prices and will usher in a sustained period of active manager outperformance where investors will be better served by firms utilizing such an approach.

This is at the heart of our OHFG investment process.

Our Reasoning for This Shift

Looking back, the Federal Reserve here and others abroad engaged in a program of non-conventional quantitative easing (QE) in response to the 2007-2008 financial crisis. This was done to increase money supply and create new bank reserves, effectively providing more liquidity to spur lending and investment.

There have been four rounds of QA dating back to the Great Recession, including the most recent in 2020, which was implemented in response to the Covid 19 worldwide pandemic and subsequent recession.

The Fed effectively lowered short-term interest rates to zero, using more traditional rate cutting means to address the economic emergency the country, and indeed the entire world, was faced with at that time.

This was literally done to keep the nation afloat during a period when businesses were being forced to close and our economy was grinding to a halt.

The result of these actions provided abundant, low-cost debt capital.

An Unintended Result

The glut of low-cost debt capital precipitated a proliferation of irrational behavior on the part of company managements and capital market investors.

Turns out that free money helps make bad projects look better on paper, distorts valuations on “marginal” cash flow projects and enables companies to more easily artificially engineer increased earnings per share.

Why Active Management Make Sense Going Forward

As previously detailed, there has existed a confluence of factors that created a “perfect storm” for active management dating back quite some time.

But our experience tells us the market stands on the cusp of change. The aforementioned conditions that have existed are cyclical in nature and thus mean reverting. In other words, we expect to see a return to normalcy where fundamentals matter.

Picking Good Companies Will Once Again Matter

As global central bank policy uncouples, we believe the valuation distortions created by massive monetary stimulus will reverse.

The cheap money that has underpinned the equity markets dating to 2007/2008 will dry up and companies will have to demonstrate their merit based on traditional performance metrics.

This will create an equity market environment in which underlying company fundamentals will once again start to influence stock returns.

It will provide a much more attractive opportunity for fundamental “stock pickers” to add value to portfolio returns.

Bottom line, investors will once again value and benefit from active management provided by managers with years of experience in implementing a disciplined stock selection process.

Our Approach

The OHFG core investment philosophy is based upon the utilization of what we refer to as our proprietary quantamental investing model

This is our fundamentally driven, systematic framework that’s utilized by our investment management team to conduct stock research, analysis, and selection of investment opportunities for inclusion in our portfolios.

It helps us in determining buy, sell and hold decisions on portfolio positions for each of our individual customers.

Our investment management team focuses on three key metrics we refer to as SMR:

• Sales
• Margins
• Return on invested capital

We believe these to be critical fundamental drivers of corporate profitability, which ultimately drives stock performance in markets where company performance is most highly valued. You can learn more about our quantamental investing stock selection approach here.

We believe this approach provides the best opportunity to generate consistent returns for each of our customers’ portfolios over time.

Furthermore, we believe this is the investment management approach best poised to take advantage of the economic climate and market environment we feel is now set to materialize. One that will likely be marked by lower monetary stimulus for some time to come.

This market is one we believe will reward companies who are able to differentiate themselves through outstanding fundamental performance, meriting investment!

The Value and Benefit to You

Markets change, that is a fact. In fact, that is the one guarantee you can rely on in the world of economics and finance.

They do so for different reasons, driven by myriad factors that can seem sensible and to be expected in the course of normal cycles , as well as those that are black swan in nature; rare and unpredictable, seemingly capable of inflicting a paradigm-shifting impact on the markets and indeed the wider world.

No need to remind of the number of such events and occurrences in recent years.

Whatever the environment we find ourselves in at any given time, having the right assets in place is perhaps the best strategy for surviving the unexpected and maximizing returns when opportunities arise. And in all periods in between.

The good news is that you benefit from the Oak Harvest Investment Management team no matter the market type or what’s occurring. Their institutional level of experience, knowledge and insight can serve you no matter what’s going on in the present, and they are always seeking to prepare your portfolio for the future.

Ultimately, the most important value-added benefit to you is the fact you have a group of experienced institutional fund managers with proven track records who are managing your portfolio.

Take a minute to think about that…

You have a group of proven fund managers who are at work striving to provide you with the best potential returns – day in and day out.

That’s a benefit you aren’t likely to find elsewhere!