He adds tech stocks today are still being driven in the short term by a lot of fast money. "Traders and speculators are keeping volatility high, and some of the excesses have yet to be pushed out of the financial markets. I believe technology required for maintaining a competitive cost position and production efficiencies will always be purchased by corporations everywhere. I also believe that technology related to communications will be the last to recover in this cycle. I favor software and services at this point, preferably those that make money and have little debt-and preferably cheap, though the best tech companies are always priced at a premium relative to their peers. These will tend to survive in the long run," he says.

Although Schaff concentrates on financial analysis, investment selection and institutional clients, Pollock's bailiwick is individual clients. He supervises the firm's high-net-worth portfolio-management team and all customer relations. The minimum account size is $500,000, although Pollock occasionally makes exceptions to that rule. He usually meets with all new clients, whom he matches with one of the firm's portfolio managers.

While the firm specializes in large-cap value investments for institutions, it selects a mix of value and growth investments for individuals. "The institutional game is about relative performance, how you are doing relative to a benchmark. You can lose money, as long as it's less than the benchmark," Pollock comments. "On the individual side, it's about absolute performance, what the client has to live on. Each one is different, and we try to figure out an appropriate strategy."

Schaff notes Bay Isle focuses on delivering its own investment products, but in asset classes or styles for which the firm does not think it can add value, it uses either other funds or managers that specialize in those areas to maintain fully diversified portfolios. "I think that this is the best way to differentiate the firm, but also to do the best service for the individual," he says.

Pollock makes sure each client has many points of contact with the firm, including meetings, individual 15-page quarterly reports, questionnaires and newsletters. The firm even has a client party in May at which as many as 300 people have attended.

He adds the company does no overt advertising. Pollock did try a radio commercial once in the early 1990s to see if the firm could target a market, but he found it to be ineffective. Most of the firm's clients have come through referrals. "If you take care of people well, it turns out fairly frequently that they have more assets. If they haven't retired yet, maybe you get to manage their pension plan when they retire. The best customers to market to are the customers you already have," he says.

In addition to intensive research and being sensitive to client needs, Block says, the firm also has set itself apart by the way it treats its own. "We are very, very interested in maintaining a happy set of employees," Block says. "In this industry, there's often a lot of pressure to make money and perform, and sometimes the work environment is not all that good, but we work hard to create a place where people can take the initiative and offer suggestions. There's a tremendous amount of respect for every employee."

Possibly the biggest factor that has made Bay Isle succeed gets back to the feelings the partners have for each other. They see each other not only as co-workers, but also as friends, and Schaff says that chemistry has been an important part of their success.

"Someone once called us a matched pair of bookends. We've never had a serious argument," says Pollock. "Unless we both agree, we don't do it. We've got to feel comfortable. We've both got a lot of mutual respect. He's very bright and talented on the analysis of mutual funds. I'm good at managing, organizing and the people part of it. We complement each other. It's worked."

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