Foothills Asset Management carefully develops portfolios of individual stocks and bonds with a specific mix of securities that depends upon the client's tolerance for risk, need for current income and the length of time that assets will be invested. Developing a portfolio of individual stocks and bonds can lower both investment costs and tax expenses by eliminating the ongoing management fees charged by mutual funds, and allowing the investor to fine tune the timing of capital gains or losses in order to minimize taxes.

The financial markets are cyclical and in any given timeframe highly volatile.We concentrate on four attributes of a good business:

• Consistent earnings growth
• Strong balance sheet
• Excess free cash flow (more cash than is required to operate the business on a daily basis)
• Better than average return on assets used in the business (the return on equity)

By focusing on these four attributes, our database of companies listed on the stock exchanges narrows from about 11,000 to around 4,400.  We then apply our proprietary research screening model allowing us to concentrate on a subset of approximately 350 companies for potential investment.

Knowing when to sell a stock is just as important as knowing when to buy it.  We make the determination to sell a stock for any of the following reasons:

• The shares of a company significantly exceed our price target
• The value of a position becomes disproportionately large relative to the overall portfolio
• A significant deterioration or change in the fundamentals of the company takes place

We use this approach in order to remove the emotion associated with the ebb and flow of the stock market, believing that non-emotional decisions lead to better investment decisions which, in turn, provide better investment performance.

Foothills Asset Management is an "active" fixed income manager.  This means that rather than passively holding your bonds to maturity, we continually look for opportunities to improve your return by making timely changes to the duration and credit quality of the securities in your portfolio.

Through active fixed income management we often are able to take advantage of anomalies in the debt markets in order to enhance both the yield and total return of your bond portfolio.

The duration of a bond is a measure of the volatility of that security - and the single most important factor for a fixed-income investor to consider. 

When interest rates are falling, an investor should hold bonds of a longer duration.  When interest rates are rising, the duration of the portfolio should be shortened to reduce risk during difficult market periods.

The bond market is subdivided into several sectors.  These sectors include government, government agency, corporate and municipal bonds.  We continually monitor the relationships among these sectors to identify the areas that represent the best value.

Government bonds tend to perform best during periods of slow economic growth.  Corporate bonds perform better as general economic conditions improve.

We monitor the credit quality of non-government borrowers.  Our goal is to avoid bonds with deteriorating credit profiles and identify securities that may experience an upgrade in their ratings.  The objective is to capture incremental yield with little additional risk.