Investment Policy Statement
From FORM ADV PART 2A – FIRM BROCHURE
Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss
A. Methods of Analysis and Investment Strategies
Methods of Analysis
PFP’s primary method of analysis is fundamental analysis. Fundamental analysis attempts to measure the intrinsic value of a security by looking at economic and financial factors (including the overall economy, industry conditions, and the financial condition and management of the company itself) to determine if the company is underpriced (indicating it may be a good time to buy) or overpriced (indicating it may be time to sell). Fundamental analysis does not attempt to anticipate market movements. This presents a potential risk, as the price of a security can move up or down along with the overall market regardless of the economic and financial factors considered in evaluating the stock.
Investment Strategies
PFP’s investment strategies are designed with a disciplined, long-term approach focused on managing risk through appropriate asset allocation and diversification. Our methodology uses a strategic approach by first focusing on the mix of asset classes (i.e., stocks, bonds, and cash) that align with the client’s willingness and ability to take risk and are appropriate to meet the client’s financial goals over time. The methodology is designed to then recommend specific investments for the client's financial plan or Portfolio.
PFP relies on information provided by the client and on certain assumptions based on our analysis about future financial factors, such as rates of return on certain types of investments, inflation rates, client rate of savings, percentage of income needed in retirement, portfolio withdrawals, tax rates, taxable capital gains and losses, college costs, estimated real estate valuation, and market returns, to develop an investment strategy for the client. All assumptions are estimates based on historical data and proprietary forecasts that serve as a useful and reasonable foundation on which to develop financial strategies.
Investing in securities involves a risk of loss that you, as a client, should be prepared to bear.
B. Material Risks Involved
Investment Strategies
All investment strategies include risk of loss that clients should be prepared to bear. PFP’s investment strategies include but are not limited to long-term trading and short-term trading.
Long-term trading is designed to capture market rates of both return and risk. Due to its nature, the long-term investment strategy can expose clients to various types of risk that will typically surface at various intervals during the time the client owns the investments. These risks include but are not limited to inflation (purchasing power) risk, interest rate risk, economic risk, market risk, and political/regulatory risk.
Short-term trading risks include liquidity, economic stability, and inflation, in addition to the long-term trading risks listed above. Frequent trading can affect investment performance, particularly through increased brokerage and other transaction costs and taxes.
Investing in securities involves a risk of loss that you, as a client, should be prepared to bear.
C. Risks of Specific Securities Utilized
The market value of securities may fluctuate, sometimes rapidly and unpredictably. These fluctuations may cause a security to be worth less than the price originally paid for it, or less than it was worth at an earlier time. Market risk may affect a single issuer, an entire industry, or the market as a whole. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks associated with investing in securities.
Equity Securities Risk
Equity securities (stocks) may experience sudden, unpredictable drops in value or long periods of decline in value. This may occur because of factors that affect securities markets generally or factors affecting specific industries, sectors, or companies.
Fixed Income Securities Risk
Fixed income securities (bonds) are subject to interest rate risk, credit risk, inflation risk, call risk, and liquidity risk. Interest rate risk is the risk that bond prices will decline because of rising interest rates. Credit risk is the risk that a bond issuer will fail to make interest or principal payments when due. Inflation risk arises because the value of the income stream from a bond will decline due to inflation. Call risk occurs when an issuer redeems a bond before maturity. Liquidity risk refers to the risk that an investor may not be able to sell a bond quickly at an appropriate price.
Mutual Fund and ETF Risk
Investments in mutual funds and ETFs are subject to all the risks of the underlying securities in which those vehicles invest. In addition, the value of your investment in a mutual fund or ETF will fluctuate depending on the performance of the investments chosen by the fund's manager, market conditions, and other factors. Mutual funds and ETFs also charge internal expenses and management fees that are disclosed in the fund’s prospectus.
Alternative Investment Risk
Alternative investments, including real estate investment trusts (REITs), commodities, and private equity, among others, may involve unique risks such as limited liquidity, tax considerations, incentive fee structures, speculative investment strategies, and different regulatory and reporting requirements.
Environment, Social, and Corporate Governance Risk
Clients utilizing responsible investing strategies and environment, social responsibility, and corporate governance (ESG) factors may underperform strategies that do not utilize such considerations. Responsible investing and ESG strategies may operate by either excluding the investments of certain issuers or by selecting investments based on their compliance with factors such as ESG. These strategies may exclude certain securities, issuers, sectors, or industries from a client’s portfolio, potentially negatively affecting the client’s investment performance if an excluded security, issuer, sector, or industry outperforms. Responsible investing and ESG are subjective by nature, and PFP may rely on rankings, ratings, scores, and other analytic metrics provided by third parties in determining whether an issuer meets the firm’s standards for inclusion or exclusion. A client’s perception may differ from that of PFP or a third party on how to judge an issuer’s adherence to responsible investing principles.
Foreign Securities Risk
Investments in foreign securities involve risks relating to political, social, and economic developments abroad, as well as risks resulting from differences between the regulations to which U.S. and foreign issuers and markets are subject. These risks may include expropriation, currency blockages, political or economic instability, and different accounting standards.
Small and Mid-Cap Company Risk
Securities of companies with small and medium market capitalizations are often more volatile and less liquid than investments in larger companies. Small and mid-cap companies may face higher costs of capital, greater business risk, limited product lines, limited financial resources, and less management depth.
Concentrated Portfolio Risk
Portfolios that are concentrated in a specific sector, industry, or issuer may be subject to greater risk of loss and volatility than more diversified portfolios. A concentrated portfolio will generally be more volatile than a more diversified portfolio.
General Risk of Loss
All investments involve different degrees of risk. You should be aware of your risk tolerance level and financial situations at all times. We cannot guarantee the successful performance of an investment and we are expressly prohibited from guaranteeing accounts against losses arising from market conditions.
June 27, 2025