W. Edwards Deming, American scholar and quintessential business consultant, once said, “If you can't describe what you are doing as a process, you don't know what you're doing.”

Russ Piazza, president and portfolio manager of Front Street Capital Management, Inc., as a Registered Investment Advisor, has built his firm by following this Deming principle. Instead of setting goals, he developed a management structure based on mastering process.

“Deming’s concept was that – if you start focusing on goals – there is a big incentive to try to take shortcuts. Every day we try to make our process as good as it can be, and the thought is, if we do that, then the results are going to be as good as they can be. If you are process-oriented, you learn every day,” Piazza explained.

Front Street Capital Management provides management services for personal accounts, IRA and retirement assets, 401(k) plans, trusts and foundations. Their primary investments include stocks, mutual funds and bonds. Clients of the Missoula, Montana-based firm have one thing in common with each other – they subscribe to a long-term perspective on investing. “Unless you are investing long-term, you are not investing – you are just speculating,” said Piazza.

Most clients come to Front Street by referral. New clients go through what Piazza calls a “gauntlet process,” which is the firm’s first step in building a trust-based client-advisor relationship. Before any money is invested on behalf of the client, the team at Front Street thoroughly discusses everything that can possibly go wrong in the future, and they help clients understand investing concepts and strategies such as volatility and risk, and the difference between them.

Since the Great Recession, which Piazza refers to as “the financial panic,” interest rates have dropped to their lowest level in decades, and he says that the greatest risk right now is in fixed income securities. “It’s a bubble of somewhat biblical proportions,” he said.

“Everyone is looking for risk in the rearview mirror as to what occurred with both the housing situation and the stock market in 2008 and 2009. If you look through the windshield, it is obvious that the next risk people don’t understand is associated with interest rates and fixed income securities,” explained Piazza. “The last time that interest rates peaked was 1982, so people have no memory of interest rate risk, and no understanding of it to speak of. That’s the greatest challenge going forward when working with clients.”

Front Street Capital Management founded the Tarkio Fund, a no-load mutual fund, based upon its investment criteria used over the previous 25 years of managing portfolios.  Front Street serves as the Investment Advisor to the Fund and believes its future is focused on the Fund’s success. According to the fund overview, the Advisor “pursues long-term capital appreciation for its shareholders with a disciplined bottom up, fundamental approach to identify attractive equity investments based on quality and price.” With its $2,500 minimum investment, this fund attracts young professionals just starting their investment careers, who Piazza feels are under-served as a market.

For more information, visit: www.frontstreetcap.com and www.tarkiofund.com