The Thornwood Financial team hard at work.

A wall of screens that display the stock market.

Tactically Managed Portfolio

How does Thornwood manage your money?

When you think of a financial advisor, you think, “They manage my money.”

But here’s a secret: the average financial advisor is pretty hands-off.

Cookie-cutter advisors—especially those who work for a big firm—are following a script. They invest your money into preselected portfolios, typically a mix of a dozen or so ETFs or mutual funds, where it will stay parked for the foreseeable future. They’re managing the emotions of investing (which is no small thing!), but not doing much with your money.

That’s not how we do things at Thornwood.

A sailboat at sea amidst a heavy thunderstorm.

The Thornwood Method

Protecting your money first. Growing it second.

If your average financial advisor were a sailboat beholden to the winds (pun intended) of the market, then Thornwood would be a motorboat: When we see a storm on the horizon, we move to safety.

How?

Thornwood portfolios are tactically managed, with carefully selected stocks—not an ETF selection that anyone could replicate. But perhaps more importantly, we are constantly working to mitigate your risk, striving for better risk adjusted returns than an index fund.

And when you get significantly higher gains from less risk… that’s a pretty big win.

Our job is to:

1. Anticipate Trouble

We keep a vigilant eye on the market, the world, and any upcoming changes that could pose a risk to your portfolio.

2. React

When we spot a dark cloud brewing, we make money moves. This often means moving more of your portfolio into cash (sometimes as high as 50%), protecting your investments from potential loss.

3. Buy a Bargain

In a perfect world, we’ll use that cash reserve to purchase stocks “on sale,” investments that are currently undervalued and have enormous growth potential. Our favorite philosophy? The stock market is the only place that holds a massive sale, and everybody leaves the store.

For tactical managers like Thornwood, market downturns are opportunities. When markets are down, we get excited and go shopping. Years like 2020 and 2022, if navigated properly, can provide the largest long-term gains for our clients.

At the end of the day, it’s our job to protect your investments, remain calm, and steer the ship (no matter the weather).

How do you pick your stocks?

First, discipline is important.

We don’t want to buy a stock if it isn’t a bargain, so we pre-determine the price before buying. This keeps emotions from governing the purchase.

Second, we analyze.

For a stock to get into a Thornwood portfolio, the fundamentals need to be rock solid. Strong earnings, sales margin, growth, and return on equity are a must. Then we look at free cash flow, and examine share structure—is stock-based compensation for management diluting value? Finally, we look at the moat. What is unique about this company, and what is preventing someone else from doing the same thing?

If a stock meets all the criteria, it’s a solid candidate for a Thornwood portfolio. At that point, we listen to past earnings calls to better understand what management is thinking and how analysts are reacting to the company’s direction.

Ultimately, picking a stock comes down to experience combined with instinct. Understanding the fundamentals is the easy part. Deciding when, how much, and at what price to buy—and later sell—is the hard part.