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Investment Process

Our investment strategy has stood the test of time through bull and bear markets.

Our conservative investment process provides the foundation for all of our money management decisions.

The essential pieces of our investment process:
  • Sadoff Investment Management closely monitors the policies and actions of the Federal Reserve Board because they create the environment for investing.
  • We watch inflationary pressures to determine the level and direction of interest rates.
  • We invest in industries that are breaking out of multi-year downtrends, undervalued, where earnings are beating estimates and insiders are buying, and/or corporate buybacks are occurring.
  • We invest for the long-term in high-quality companies. Our goal is to sustain superior long-term rates of return while reducing risk.
  • We follow the Federal Reserve Board because the policies and actions of the Fed creates the environment for investing. The Fed controls the availability and cost of money otherwise known as money supply and interest rates. Historically the Fed has been responsible for business expansions and recessions.

When the Fed’s monetary policy is too restrictive that typically brings about a bear market and recession. They do this by raising short-term interest rates above long-term interest rates, otherwise known as an inverted yield curve. An inverted yield curve has been the best predictor of a recession.

When the Fed’s interest rate policy is too restrictive we will generally reduce our clients’ exposure to stocks.

Historically, a recession caused by an inverted yield curve often leads to a bear market in stocks causing the stock market to fall more than 30%. We know that 95% of stocks fall during a bear market so preservation of capital becomes essential.

We monitor interest rates and inflation to help determine the level of interest rates. The Fed alters interest rates to try and keep inflation under control, therefore monitoring inflationary pressures is essential.

While we do not invest in commodities, we track them as they are a leading indicator of inflation. Rising commodity prices will often lead to rising inflationary pressures and signal the Fed may have to raise interest rates to keep inflation under control. This is potentially a bad time to be invested in stocks and bonds. Rising inflationary pressures lead to rising interest rates and falling inflationary pressures lead to falling interest rates. When interest rates and inflation are falling it is typically an excellent time to own stocks and bonds.

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Stock Selection Methodology

Our stock selection methodology was created over 50 years go. Find out why it has withstood the test of time. Click here to learn more.

Stock Selection Methodology

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