“Reduce The Risk, Not The Return”
Our mission statement comes from understanding and experiencing the pain of watching a portfolio drop.
Independent – We do not use any proprietary investment products
Fiduciary – We place our client’s interests ahead of our own
Experienced – Over 30 years personal experience as a financial advisor. We utilize a proprietary technology created from and based on a 100 year old methodology.
Tactical – Defense driven approach to navigating market volatility with an objective of stable, strong performance
Customized – We align portfolios to our investor’s specific needs for return and concern for risk through diverse and fully liquid investment options.
Objective – Minimize emotion, maximize return following proprietary technology
“Past performance is not indicative of future results!”
If you’ve ever read an investment disclaimer then you’ve seen words like these. The investment industry wants to make sure you know this fact. So why then are so many asset allocation and investment recommendations based on these same long term historical averages? The belief is if you diversify according to this predetermined or strategic allocation based on things like your age, goals, risk tolerance and then hold your investments for an extended period of time regardless of the market conditions you should expect certain results.
This is called Buy and Hold, but it is more of a “Buy and Hope”.
Hoping for future results based on past performance.
Wasn’t past performance not indicative of future results?
In my opinion this is an outdated and potentially dangerous approach to investing. All you have to do is look back to years like the 2008 financial crisis when markets lost over 40% of their value; or the 2000 tech bubble when the Nasdaq lost 75%! How did “Buy and Hope” work in those years? It didn’t.
Historically the markets have dropped 20% or more like this once every 3 1/2 years (Capital Market Research). They’re called Bear Markets and if you get caught in their way they can be financially and emotionally devastating.
It is our belief that the wiser approach is to invest based upon current trends. Do you drive your car by looking only through the rear view mirror? Of course not. We focus on the current trends and not a long term average.
This is defined as a tactical approach. We believe that there are times to play offense and there are times to play defense.
During favorable market conditions we invest on offense with a goal of helping you build wealth by seeking to deliver positive, real returns; during unfavorable periods we move to defense where our goal is to help you protect your investment capital.
How do we do that?
WHERE to invest
We don’t use long term historical data hoping that the past will drive future results.
We do not base investment decisions on forecasting or predicting the future. We use price changes in the markets to determine the areas that are the strongest currently relative to others. This is called Relative Strength.
What areas of the markets are in favor? It could be stocks, bonds, real estate, commodities or even cash. The objective is to own the strongest areas. When the markets change, we change with it. Your portfolio will always focus on owning investments that are demonstrating the greatest overall strength.
We will use primarily Exchange Traded Funds (ETFs) as the investment vehicle of choice. ETFs have exploded upon the scene in recent years as an attractive, diversified, liquid, low cost way of investing in many areas spanning the globe which can be as diverse as a broad based fund that mirrors the S&P 500 Index or as narrow as a fund that owns LiveStock.
Research in this area is provided by a strategic alliance between Carlson Wealth Management and Dorsey Wright and Associates, an institutional registered advisory firm whose work focuses heavily on Relative Strength and Point & Figure analysis.
WHEN to invest
According to wall street proponents of buy and hope this is “all the time”. Our belief is that there are times when to be on offense and invested in the markets, and there are times when to be on defense and less invested in the markets.
In addition to the relative strength research provided by Dorsey Wright and Associates, we utilize our trend indicator called the Bearometer to identify changes in market trends.
The objective is that when the trend is positive we will follow the investment models just described under “Where to Invest”, but when it turns negative then certain specific defensive steps will be taken with the objective of protecting the principal. This is simply like buying insurance to protect yourself against loss.