What we do

P B Advisor (PBA) offers services as a Registered Investment Advisor.

Investment Advisory is done to Clients on continuous basis and is based on a fiduciary duty. 

This activity is regulated by Federal and State laws, by the SEC, FINRA, NASAA. 

We have strict operating requirements while we act as Registered Investment Advisor (RIA).

For instance, when acting as RIA we cannot transact with foreign entities. 

The client must be a US Person, meaning a US Citizen a Permanent Resident a non-physical person (company, partnership, trust) that is recognized by US Law as a US Person. Under no circumstances PBA can offer Investment Advisor services to non-US Persons. 

We are required to disclose any potential conflicts of interest to clients and enforcing authorities. 

We must obviously put our fiduciary duty ahead of any self-interest. We cannot trade ahead of the Client for example.

Investment Advising is based on providing investment supervisory services. 

There are several ways to do this. Many advisors will take ownership of the decision-making process in full, and the investor will give them the money and, no questions asked, they will invest. They decide what to buy or sell, when and how much. 

That is called discretionary advising. You pretty much can collaborate with them or not.

We do things in a little different way. 

We listen to what you as a Client want, we build a risk profile and an expected return; then we send you an idea of we would like to invest to, and we discuss it with you. You have a say and always do about what asset to buy or not (you maybe do not want to invest in companies in certain industries or operate with certain countries etc) how much of it to buy or sell. 

We work for you and in your interest only. While you decide what to buy or sell, we also have the obligation to make you money, not to lose it. Sure, a certain amount of risk is always present in investing. Stock market can be volatile, and some days is up, some is down. It is a no matter of concern… up to a certain point, then it matters. All positions we enter while following your instructions require us to set an exit for your safety’s sake. Warren Buffett said that rule number one is “never lose money and rule number two is to look at rule number one.”  Hence while we enter a position and you give us permission to buy an asset for your account, we also establish stop limits for capital preservation. That is not a discretionary act. It is simply part of our non-discretionary duty. You might not want to stop limits or allow a greater swing. But once you give us approval to buy an asset amount you give us in our understanding also the approval for the action to not lose you money.

The way we operate is not looking at the waves of the market. We have a long-term view. That is for equities we don’t care much about the stock price that we look at but at the value of the company. 

As Warren Buffett put in more eloquent way than I will ever be able to: “We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring. Within capitalism, some businesses will flourish for an exceedingly long time while others will prove to be sinkholes. It’s harder than you would think to predict which will be the winners and losers. And those who tell you they know the answer are usually either self-delusional or snake-oil salesmen.

At Berkshire, we particularly favor the rare enterprise that can deploy additional capital at high returns in the future. Owning only one of these companies – and simply sitting tight – can deliver wealth almost beyond measure. Even heirs to such a holding can – ugh! – sometimes live a lifetime of leisure.

 Warren Buffett 2024 BRK-A 2023 Report”

We spend a considerable amount of time learning about businesses traded on stock markets – public companies. We read their reports, we pick apart their numbers and try to understand what they do and what they are going to do. This is called fundamental analysis. It doesn’t really care what the stock market is doing. In the way we operate, markets are useful to us just to take advantage of the difference between what sentiment “mood” is about a company versus what that company value is, again based on our metrics. If there is a difference between the two (and normally there is) and is to our advantage AND we are right we are going to make money no matter what, eventually. If information change and affects the business evaluation, we act accordingly. But at the same time if we see a solid “margin of safety” in a business and it is sound is best to enter even if in the short term does not look advantageous. “Buying great businesses at fair prices is better than buying fair businesses at great prices” Charlie Munger warned. Otherwise, the train leaves without you.

As Investment Advisors you pay us by a percentage on the Asset Under Management (AUM). We calculate the amount at the end of the quarter and charge a percentage for the next quarter. We are generally more moderate than other Investment Advisors because we strongly believe that the faster your AUM grows the best is for all of us.

You can stop working with us at any time giving us notice. We are then obligated to pay back the pro rata per day fees that have not been earned yet. For account protection to make sure that the account while not monitored or supervised can suffer a loss we might need to put stricter stop limits on positioning unless explicitly otherwise instructed

You might approach us as Investment Adviser not to have your money managed on continuous basis by us but simply to ask our advice on your finances, on how to reach a certain target and goals, and how we would suggest dealing with certain events. Or to give our review on a portfolio that you manage directly or via someone else, give our evaluation on a company you might be interested in etc. In that case we will charge you by the time spent by the hour. These are not Assets Under Management but just pure advice. Over time this way of dealing with our services tends to be more expensive than working with us in the AUM non-discretionary way.

Warmly,

Dr Paolo Bernardi PhD