Fit Financial Consulting LLC is a Colorado domiciled registered investment advisor.


Individual stocks offer a completely different method for building your portfolio than that of Mutual Funds and ETFs. First, buying one stock cannot provide you with a fully diversified portfolio. Not only would you be exposed to both systematic and unsystematic risk, you would be completely neglecting the fixed income and alternatives portions of a well-diversified portfolio. However, individual securities do have their advantages.

First, individuals stocks do not have an internal expense associated with ongoing management as would a MF or ETF. Second, by gaining a focused exposure on one security you can often afford yourself far greater upside potential in conjunction with the additional risk you are taking on. For these reason, individual security selection typically requires far more research and analysis into the underlying business. So too is individual security selection more frequently used as a piece of a well-diversified portfolio, rather than the entire thing. Not only do you need to analyze the company’s current position, but be reasonably sure that position will hold, or improve in the future. Your goal is to have the shares you purchase appreciate over time so that you can sell them for more than you purchased them for and/or to receive a share of the company’s profits in the form of a dividend.

From company analysis, to dividend forecasting, I can help you interpret the most likely outcome for the stocks you are looking to analyze. Discounted cash flow models and regression analysis can give us a better idea of the true value of the firm and its growth potential.


Mutual Funds and ETFs

Mutual Funds (MFs) and Exchange Traded Funds (ETFs) are excellent ways to provide broad diversification without requiring you do the research or trade all of the underlying securities.  MFs and ETFs range from very broad, fully diversified portfolios, to very narrowly focused asset classes and categories.  With this in mind, you can build an entire portfolio around one fund or use multiple funds to piece your portfolio together in a more customized fashion.  MFs and ETFs do offer something of a tradeoff though.  While MFs are often actively managed by a portfolio manager, that active portfolio management often comes at a much higher cost than the typically passive style of ETFs.  On top of that, once you start looking at the universe of MFs and ETFs you will find there are literally thousands of funds to choose from.

Whether you already have a fund in mind and would like a second opinion on it, or are looking for some guidance as to how to fill a gap in your portfolio, I can help provide you with additional insight into these funds and the costs and benefits you are likely to derive from each.

Security Analysis

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Bonds are the opposite side of the same coin from stocks. Where a stock investor is purchasing an equity stake in a company and looking to share in the gains of that company, a bond investor is loaning that company money with the expectation of receiving a set rate of interest on that loan in the form of a coupon and/or a discounted purchase price.

Bonds are typically sold in increments of $1,000.00. Therefore a bond selling for $1,000.00 is said to be trading at par, where as a bond selling for $950.00 is trading at a discount and a bond trading at $1,050.00 is trading at a premium. Therefore, if you loaned a company $950.00 today, with the expectation that they would pay you $1,000.00 a year from now, your profit (your reward for forgoing spending of the $950.00 today) would be $50.00. Now you are probably asking yourself why anyone would by a bond at a premium. That has everything to do with current interest rates and the coupon the bond is paying. In our first example, the investor made all of their money from the difference between the purchase price and par value. However, most bonds pay interest annually or semi-annually in the form of a coupon. Therefore, a 5% coupon bond paying annually would pay $50 every year to the holder of that bond. Our investor in the prior example would likely be willing to pay $1,000.00 for this bond with the expectation that the bond will be paid back in full, with the addition of the $50 coupon that is owed.

Ultimately, much of the same analysis that goes into stock investing is required for bond investing. Where the stock investor wants to know if the company has the capacity to continue to pay dividends, the bond investor wants to be sure the company is financially stable enough to pay the coupons. The exit strategy is a little bit different however. Where stock investors can hold that investment for as long as the company continues as a going concern, bonds do have a termination date at which the par value is meant to be repaid. Therefore the bond investor wants to be reasonably sure the company has the financial capacity to pay off all of their debt when it comes due, or that they can liquidate their position to another investor while making a profit or minimizing their loss.

The very same discounted cash flow models used to analyze a company from the standpoint of a stock investor, can be used to help us determine if the company will have the financial capability to pay its debt obligations. This analysis, coupled with bond rating classifications from other experts in the field, and our expectations of the future economic situation can further aid in our decision making process.

Mutual Fund, ETF, Stock, and Bond analysis is provided for $1,000.00 per analysis requested.  Please see my menu of services for a reduced pricing schedule for this service.