An Introduction to Our Investment Approach
By Ben Kirby, Chief Investment Officer
Introduction
I joined The Millstone Evans Group in August 2025 following a 16-year career as a Portfolio Manager and Head of Investments at a large asset-management firm, where I led a team of roughly 55 professionals and oversaw approximately $45 billion in client assets. Having known Sacha for many years, she was among the first people I reached out to when exploring the next phase of my career.
The Millstone Evans Group has grown steadily over the decades and entered a new phase of expansion after converting to a Registered Investment Advisor (RIA) in 2021. I was hired to help manage and accelerate this next stage of growth by building a scalable platform through which excellent client outcomes can be delivered efficiently. A key component of that platform is a disciplined, evidence-based investment process—an approach we’re pleased to outline below.
Risk Management
Successful investing is about managing risk, not avoiding it. – Benjamin Graham
We believe that risk management and investment success are inseparable. Accordingly, we begin our investment philosophy with a discussion of risk—how we define it and how we manage it.
- Traditional academic models define risk as volatility (standard deviation of returns). While useful, this view is incomplete.
- In our goal-based investing framework, we augment that definition to view risk as “the probability of shortfall”—the likelihood that a portfolio will fail to meet long-term goals.
In practice, risk encompasses both the day-to-day fluctuations in portfolio value and the long-term probability of falling short of one’s objectives. Our goal is to maximize the probability that clients achieve their financial goals while minimizing unnecessary volatility along the way.
Is cash risk-free or risky?
A ship in harbor is safe, but that is not what ships are built for. – John A Shedd
This distinction between volatility and shortfall risk becomes clear when considering the simplest investment of all—cash.
- Traditional View: Cash is “risk-free” because its nominal value doesn’t fluctuate. When people talk about “de-risking” a portfolio, they often mean increasing cash allocations.
- Goals-Based View: Cash can be risky because of its low expected return (typically 0–3% before taxes and inflation). For an investor targeting a 7% return, holding excess cash raises the likelihood of long-term shortfall.
Harmonizing the two views of risk:
Bringing these perspectives together:
- Taking too much risk (volatility) increases the chance of permanent capital impairment and behavioral errors (e.g., panic selling).
- Taking too little risk limits long-term returns and makes it difficult to achieve financial objectives.
- Engaging in market timing or undisciplined risk shifts typically produces the worst outcomes—unnecessary stress, high costs, and poor results.
Four Pillars of Our Investment Philosophy:
- Long-Term Perspective:
“The stock market is a device for transferring money from the impatient to the patient” – Warren Buffett.
We aim to be patient capital investors—disciplined, long-term investors who avoid the pitfalls of market timing. While short-term market movements are unpredictable, long-term investors have historically enjoyed strong, positive outcomes. Investment success often depends less on forecasting markets than on managing human emotions—fear, greed, and boredom. The antidote is long-term, evidence-based, disciplined investing.
- Asset Allocation Drives Returns:
Strategic Allocation:Asset allocation is the primary driver of portfolio performance. We believe how much you own is as important as what you own. Our portfolios are broadly diversified across global asset classes and employ a core-satellite framework—a stable core of low-cost, diversified holdings complemented by targeted satellite positions designed to capture alpha, enhance income, or support specific values-based objectives.
Tactical Rebalancing:We periodically make modest tactical adjustments based on relative asset-class valuations and forward-looking return expectations. These shifts are often contrarian, made within defined guardrails, and always mindful of tax efficiency.
- Focus on “Real Real Real” returns:
Inflation, fees, and taxes—the three silent thieves—quietly erode investment results. The true measure of success is your after-inflation, after-fee, after-tax return—what we call your “real, real, real” return.
To preserve more of your wealth, we favor low-cost, tax-efficient vehicles such as index ETFs and separately managed accounts. We also emphasize investments with inflation-hedging characteristics appropriate for each client’s stage of life—whether accumulating or drawing down assets.
- Preference for Equity Income:
For many investors, we believe the portfolio can be improved by taking a portion of what would typically be a bond allocation and purchasing dividend-paying equities instead. Dividend paying equities will typically generate a higher return stream than bonds and lower volatility than non-dividend paying equity. Dividends provide the same income benefit as bond income while also protecting investors from the ravages of inflation. In most cases, dividends also enjoy preferential tax treatment, enhancing their appeal.
