Broker Check

Fee-Based Tactical Management

“The essence of investment management is the management of risks, not the management of returns.”  Benjamin Graham

Managing Risk: Defense First

One of our most important client principles relates to our overall investment philosophy and client education. When it comes to managing money, we focus first on defending portfolios from losses and only then seeking competitive returns. We do not believe that strong risk management and portfolio growth are incompatible, and we spend a lot of time educating clients on our philosophy. We also believe in financial education across the board.

We stress that we are not overly conservative, but that on a mathematical basis, avoiding loss is more important than capturing gains for client portfolios. Without a strong defense, any offense is not going to prevail in the long run.

Technical analysis and quantitative decision-making is at the foundation of our philosophy. Our portfolio strategies are not meant to identify absolute bottoms of the market or absolute tops. That is extremely difficult to do once in a lifetime and almost impossible to do consistently over many years.

Rather, we aim to conservatively buy on the way up the hill, when markets are advancing. Further, we want to start selling after a market peak has already occurred, pursuing a defensive stance as a market decline begins. We use a variety of strategies and principles of diversification, and our strategies are actively managed. Many are in the trend-following—or momentum—category.

What we don’t do is adopt a “set it and forget it” approach to money management. We do not want to leave our client portfolios exposed to the volatility of markets without defensive actions and tactics to avoid wherever possible the worst-case scenarios. Does this work perfectly at all times? Of course not. We always want to know where to sell an investment before we even buy it.

“I manage risk more than I manage investments.”

By raising the probabilities of avoiding deep losses, we believe client portfolios have a better chance of growing productively over the long term. We tell clients it is not good enough to make a profit, you have to keep the profit and build upon it also. We believe that by maintaining a non-emotional, rules-based, technical approach to money management, we can help clients outperform “buy-and-hope” portfolios over the course of a full market cycle. We have the ability to offer truly dynamic portfolio management. Markets evolve quickly. For clients to optimize their investment success, we must have the ability to adapt to those changes.

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