The financial industry preaches to investors the need to stay fully invested while utilizing diversification and asset allocation as their primary means of loss mitigation.
Though, in times of economic turmoil, such as the technology bubble of 2001-2003 or the more recent mortgage meltdown of 2008, these widely touted methods failed investors when needed the most. Why?
The answer is simple. During times of crises, the vast majority of asset classes are highly correlated and collapsed in conjunction with each other.
We believe there is more to managing your financial future than buying a handful of overly diversified mutual funds or ETFs (Exchange Traded Funds), merely crossing our fingers and hoping markets move higher.
Legendary football coach Paul “Bear” Bryant famously said, “Offense sells tickets, Defense wins championships”, noting onlookers would often equate offense to excitement, though the game isn’t about excitement – it’s about winning. Coach Bryant understood the team with the best defense, preventing the opponent from scoring, would be the team most likely to win.
We carry this belief to the investing world. Defense and preservation of capital is more critical to an investor’s success over time.
While traditional methods often fail investors at times of crises, we believe defense in investing is the ability to protect your downside by controlling risk via the use of disciplined capital preservation strategies…
Our belief isn’t one, which we’ve pulled out of thin air. Investing icons coupled with decades of studies done by well-respected, independent companies, who service the financial industry, have come to the same conclusion year after year after year…
Our discretionary models are managed from a client first perspective. We remove all conflicts of interests that are inherent to the industry. All investors, regardless of the amount of capital invested, receive the same execution price, while our capital preservation strategies allow for our winning investments to run, while cutting losers before becoming problematic.
Understanding our downside and volatility the day we make any specific investment and cutting losers before they become a drag on the portfolio is a key building block of our models. As stated, we implement a capital preservation strategy on each core investment we own. Coupling this with our volatility adjusted position sizing approach given each name’s historic volatility, we build portfolios designed to temper volatility, while providing competitive returns with downside protection.