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Our Beliefs



Why? Because real returns fluctuated from a loss of 43% to a gain of 54%. Can you stomach those fluctuations when it comes to your money? Most investors can’t. They give in to their emotions and make bad decisions. That’s why they fail. You get one shot at this financial journey. You’ll have opportunities for success, and even greater opportunities for failure. But failure is not an option. Our strategies are built with this in mind. They put downside protection first to create a smoother investment ride, and keep you disciplined over the long-term so you can reach your full financial potential. Sophisticated wealth management used to be reserved for only the wealthiest investors. Not anymore.

Traditional advisors rely on Modern Portfolio Theory (MPT) for investing guidance. However, Modern Portfolio Theory is not so modern as it was created in the early 1950’s. Times and markets have changed quite a bit. While the underlying theories of MPT are not broken, we now know they are just not complete. More recent research reveals that markets aren’t so efficient and asset classes that may be non-correlated today are much less so in volatile environments. So this new research and understanding of how markets work must be taken into consideration when investing your money.

Our belief is that markets are not always priced efficiently and that investors do not always act rationally. Since markets rarely act the way textbooks say they should. Markets can and do rise and fall. Investors can and do act irrationally for long periods of time. Using price momentum to capture these waves in a portfolio makes a lot of sense.

In 1992, Nobel Prize-winning economist Eugene Fama and Ken French created the 3-Factor model to describe stock returns: 1) Company Size, 2) Price-to-Book Ratio, and 3) Market Risk. In 2015, they extended the model to 5, adding Profitability and Investment. We believe momentum, identified by Fama and French as the persistent market anomaly, is the sixth factor. For this reason, we built our momentum strategy using all six factors.

Our approach is to combine reality (evidence) with theory (MPT) and to create a better investment experience for our clients. Here are some truths we’ve discovered and use with our investment strategies:

  • Being too aggressive can create too much volatility for investors to stick with it, better to stay moderate than be overly risky
  • Having a strict, rules-based and disciplined approach is the surest path to long-term investment success
  • Every smart investor looks at the downside first, not the upside.
  • Investing based on sound philosophies, not just one theory
  • Focus on reduced risk and volatility through global diversification and trend-following strategies
  • Reduce the cost of investing with tax efficient and low expense ratio ETF’s that best represent the asset class we desire
  • Simplify the investing experience – you should fully understand how and why you are invested the way you are

Our Investment Beliefs:

  1. 4 rules of financial institutions - they work for them, not you. We must work within the system but not be controlled by it.
  2. Only three ways to build true wealth - own business, real estate, financing deals.
  3. The biggest obstacle to investing success is investor behavior, as proven by DALBAR’s annual study.
  4. Indexing almost always outperforms active investing.
  5. The only active form of investing proven to work is trend following.
  6. Volatility eats your returns - lower volatility, consistent returns (even if lower) will increase your dollar growth, make for a smoother ride, and prevent you from making bad decisions with your money.
  7. Poor investor behavior is the surest way to fail. Investing is the only place where people routinely buy when prices go up and sell when prices go down.
  8. Diversification is important to control risk, volatility, and smooth returns (which improves dollar growth). Too much diversification can diminish returns.
  9. Costs matter a lot - expense ratios, tax efficiency, and advisor fees. However, a good advisor can be well worth his/her weight in gold. Make sure you have a good one.
  10. Need two buckets of money - short term and long term. Manage them accordingly.
  11. Create your own safety net, don’t rely on government or corporations to provide it for you.
  12. Investing is not about a goal, a target, or a magic number - it's about maximizing your financial potential with good habits, control, value (what you value and what money gives you), and a financial model that reflects/anticipates real life.
  13. Markets are not always efficient (often are not), investing theories are often wrong, no one can predict the future (including how the market reacts to any given situation), nor what future returns will be.
  14. Money is not math and no mathematical formula can predict the best allocation, expected return, correlation, or anything for that matter.