We strive to provide positive absolute returns regardless of the market environment.  Our approach is practical and based on proven historical relationships. We have faith in supply and demand economics which leads us to support a “reversion to the mean” mentality, knowing that nothing goes up forever. Our approach is a level headed, analytical approach, avoiding the emotional element of investing.  Resisting euphoria when markets are strong and refusing to follow the majority when markets are poor, allows us to take advantage of crowd mentality.

We believe in tactical asset/sector allocation, adjusting our position in asset classes as conditions warrant. While the markets cannot be precisely timed, there are periods when the equity market is extremely over or under valued.  Reducing exposure to an over valued equity market, as in 1999-2001, can greatly preserve investor’s capital. Click here to see the volatility of returns from different asset classes and how captial can be protected by selecting the correct asset class.

 
We focus on what is important to produce performance. Based on multiple studies, approximately 70% of a portfolio’s return comes from the asset class, 20% from the sector and industry and only 10% comes from individual stocks. Therefore, we divide our time accordingly.    

We employ flexible tools that adapt to different market cycles. In contrast, a majority of firms employ a rigid investment discipline that performs well only during certain times in the market cycle. For example, firms may be deep value or aggressive growth and generate strong returns when their style is in favor.  However, the converse is also true leading to extended periods of underperformance.  

As part of our flexible investment process, we use non-equity assets when appropriate.  The advent of Exchange Traded Funds (ETF’s), which are baskets of like securities, allows us to easily gain exposure to a broad variety of non-equity assets. We can buy securities that track bonds, international equity markets, commodities, real estate investment trusts or short the market. These investments often produce performance independent of the stock market and allow our investors the opportunity to benefit from securities outside of the equity market.

Finally, we align our interests with your interest.  We do this in two ways. First, we have invested our own personal assets in the same portfolios.  Secondly, through our performance fee structure (available to accredited investors and described in Form ADV II. ), we adjust our fees to how much money we make for our clients.  If we do not perform well, our fee is reduced.  If we generate higher returns, our fee is increased.  We offer this type of fee because of our confidence in our ability to get the job done.