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Wealth Management

FOMO: The Fear of Missing Out 


Almost anyone can be successful managing money in an up-trending market. We feel that we earn our money by making those tough decisions in those down-trending or catastrophic markets.

“Advance and Protect” is the name we've given to our portfolio management strategy. It can be thought of as very much the opposite of "Buy & Hold," however, more specifically; we like to think of it as "A defensive model with an offensive strategy" - both a buy strategy and more importantly, a sell strategy. You may have heard of "stop loss orders" in the past – this is where you pick a price at which you plan to sell out of a security if it goes too low. Well, we take things much further than just having a bailout plan for our portfolios.

What does this mean?

 Perhaps it is easier to explain what it does not mean. It means that we don't "ride out the storm." It means that we don't implement a "set it and forget it" approach to your life savings that you have worked so hard to save up. Finally, it means that we don't leave your portfolios to be managed by chance, in hope things will come back when we want them to (hopefully sooner than later).

So, how do we do it?

We use a compilation of software suites that represents a significant portion of our firm's annual operating expenses. The software engines range from tools for asset allocation, fundamental analysis, and investment filtering systems, legal insider buying analysis, all the way through stochastic modeling overlays (technical analysis). While the cost of these tools is significant, we firmly believe that we can't afford not to spend the money. Bottom line, our clients know from their own life experiences - success doesn't come cheap.

We've built numerous asset allocation models that range from models for those who are still in their "Accumulation Phase" of retirement planning to portfolios for those who are in their "Distribution Phase" of retirement income planning. Each of these models is tracked on a daily basis to avoid any unexpected changes. The quantity of holdings in each portfolio is related to the investment objective of the portfolio at hand.

Once we've screened the qualitative and fundamental side of our model portfolios, we then feed this information to our technical analysis software that allows us to closely track, on a daily basis, every investment our clients own. Our software uses an algorithm that tracks 615 parameters for each position (investment) in our models.

On the simplest of all levels, we track the movement of each investment that we own and look for opportunities to buy when it looks as if a bottom is beginning to form in a particular security. This is called “Buy Side” analysis. Similarly, and most importantly, we track the movement of each investment to look for opportunities to take profits off the table or cut losses against a security that we feel has a high probability of taking a downward plunge.

chart exampleThis is known as “Sell Side” analysis, or having an “Exit Strategy,” and it's one of the largest components that most other financial planning firms don't address. It also happens to be one of the most important elements to successful investing. It's not good enough to make a profit… have to keep the profit, too!

With all that said, our strategy is not clairvoyant. We do not have a crystal ball. We will rarely buy at the exact bottom and sell at the exact top. Doing so is next-to-impossible. However, what we ideally want to accomplish is to buy early on the way up, participating in as much of the gains as possible - and then selling early on the way down, missing as much of the downside as possible. So, the goal is maximum upside-capture with minimum downside-capture.

What about fees?

In most cases, we charge a fixed annual percentage to each portfolio we manage, which is billed directly from the account on a monthley basis. Furthermore, we pick up the costs of all trading fees. In other cases when company's pay us on your behalf we provide this service as an overlay at no charge to the client.

The degree of sophistication, expertise, and insight necessary to bring portfolio management of this caliber to the individual investor is not easily found in the industry. Upon initial explanation of our process, most new clients comment, "Of course, we'd be interested in such a method of wealth management...IF it existed!"

Well, it does exist - and the only task left at hand is to bring awareness of this system to you - the individual investor.