The Mission: Reduce the Risk, Not the Return
Carlson Wealth Management although founded in 2010 by John Carlson was actually born during the devastating bear market of 2000-2002. It was the financial and emotional stress of markets that saw declines of 50-75% that drove Mr. Carlson, now a 35 year industry veteran, to develop better answers in how to help preserve investor’s wealth from market downturns that can potentially destroy lives.
Core Beliefs
The company does not follow conventional asset allocation of simply diversifying your investments across multiple areas. Instead the company follows a strategy of relative strength rotation which is an approach that first identifies, then invests in and when needed, rotates among only the strongest areas of the markets. Our goal is to always maintain a diversified portfolio focused on areas that demonstrate market strength. There is no restriction on where to invest. If it is strong then it is a candidate for inclusion in your portfolio. When it loses strength it is a candidate to be replaced.
The company does not follow the traditional, buy and hold approach of the modern portfolio theory.
Instead we utilize a defense method (the Defense) to efficiently identify changes in market trends. The objective is to help preserve the value of your portfolio during market declines.
Where To Invest – The Majority Opinion
Wall Street is full of opinions. An investor who is selling a particular security obviously has a different opinion than the investor who is buying it. The bottom line is that for every Buyer there needs to be a Seller; and for every Seller there must be a Buyer so different opinions are mandatory for markets to function.
At the end of the day Carlson Wealth Management believes in following one opinion, The Majority Opinion.
And the only place to find the Majority Opinion is in the Price. It is here where the Buyer and Seller come together. If there are more buyers than there are sellers, the price can only go in one direction…Up, and if there are more Sellers than there are Buyers then the price can only go in one direction…Down. These are the basic tenets of Supply vs. Demand.
The majority opinion provides the first essential element of our strategy – WHERE to invest.
When To Invest – Defense Wins Championships
If you know that the markets will occasionally experience down periods would you want your funds just left exposed during those times? Just like a football game there are times to be on offense and there are times to be on defense. If you were a football coach you would NEVER play your offense the entire game. When you lost the ball you would bring in your defense.
Traditional money management is typically always on offense. Always invested in the markets. Always at risk.
Tactical money management will adjust to market conditions sometimes playing offense and sometimes playing defense. This is our second essential element to our strategy – WHEN to invest.
The traditional money management approach is commonly referred to as “Buy and Hold”. Risk is believed to be controlled by simply diversifying. We believe that this is NOT a strategy, but a posture. It is the same as a sailor pointing the boat in one direction hoping that the tides and winds will take you to your destination. If you’ve ever sailed then you know that this is the true meaning of hope.
We believe that taking a tactical approach or navigating to your destination is a superior approach to investing. Bear Market declines are devastating both financially and emotionally, and difficult for investors to hold through. Through proper tactical investing both market declines and market advances can be identified and managed.
