Many investors who would not set foot in the office of a dentist stuck in the 1960s, still rely on portfolios built and managed based on ideas from decades ago, and that includes Wall Street’s favorite “pie-chart” or “paint-by-numbers” formulaic portfolios.
It is a different world out there, and so it is imperative that investor portfolios can set aside yesterday’s embryonic, obsolete, or falsified investment ideas and replace them with their thoroughly-vetted modern successors.
For over twenty years our innovative approach has enabled investors to wrestle out of the market gyrations consistent stair step benefits.
The below table captures the key characteristics that define our approach and differentiate it from traditional, conventional, and legacy offerings. Take a careful look at the comparisons and click the link in each box for more information.
PRACTICE CAPABILITIES
Vertical Integration (from first-hand market research to proprietary investment strategies) +
Deep Expertise in quantitative analytics and behavioral finance +
Hands-on investment management
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Generic and second-hand research
Outsourced investment management without direct visibility, control, or accountability
PRACTICE EMPHASIS
Emphasis on leveraging disruptive innovation to secure intellectual independence from Wall Street and obtain tangible investment edges
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Reliance on Wall Street orthodoxy and conformity with the views of investment herds
INVESTMENT ORIENTATION
Always Client-Centered but first-and-foremost Market-Driven; it’s not enough to safeguard wealth without utilizing strategies to help ensure it can grow—responsibly sustainably, and above all aspirationally
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Client-Driven but Market-Unaware; orientation borrowed from and passively reflecting static and formulaic client objectives/ tolerances regardless of market awareness
PORTFOLIO DRIVERS
Continuous market awareness, fluid adaptation, and risk vigilance
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Fixed objectives and preset tolerances regardless of market regime status
INVESTMENT PHILOSOPHY
Active navigation of shifting Market Regimes (in other words, zero market-timing, maximum macro-tracking)
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Strategic Asset Allocation; Pie-Chart Portfolios; Formulaic Investing; Buy-and-Hold; Indexing; Tactical Portfolios; Market Timing; Seat-of-pants; Endowment-style Managing-the-Managers, etc.
INVESTMENT STYLE
No projections, forecasts, assumptions, or expectations—just active market-adaptive navigation of market regimes and risk-control of market-regime shifts, with a secondary focus on tax efficiency
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Market and economic forecasts, return and volatility expectations, asset class productivity assumptions, discounted cash flow projections
INVESTMENT PEDIGREE
A unified framework centered on the latest advances of Multi- and Meta-Factor investing (4th Gen., 2010+)
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Antiquated underpinnings: Single-Factor model / Modern Portfolio Theory, Efficient Market Hypothesis (Gen. 1, 1960’s); Two- and Three-Factor models (Gen 2-3, 1980’s+)
MARKET VIEW
Markets are Regimes (large-scale and scope systems with major self-organizing and self-regulating properties that tend to maintain directional orientation through gyrations and noise and only shift rarely to a new equilibrium)
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Markets are constantly random. Markets are continuously trending. Markets are the punching bag of external forces (earnings, geo-/politics, central bank liquidity, and interest rate policy…)
RISK MANAGEMENT—FOCUS
Minimizing of Shortfall (falling short of paying bills or meeting funding targets)
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Risk control based on of absolute levels of Volatility and/or Drawdown
RISK MANAGEMENT—ERROR MITIGATION
Minimize False-Positive (crying wolf signals) and False-Negative (bear market blinders) Errors
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Minimize Tracking Error (veering off preset course regardless of benefit/harm)
PORTFOLIO ALLOCATION
Allocation in Factors (investments that trend, are cheap/expensive, have a certain level of quality, volatility, size, etc.)
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Asset Allocation (classes, types, sectors, industries, geographies…)
PORTFOLIO DIVERSIFICATION
Portfolios are built to Saturation, which balances out the benefits of diversification with its detriment of dilution
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Diversification seen as “the only free lunch” and is pursued expansively without awareness of its detrimental downside — dilution