Asset Management

Managing Risk: The foundation of managing risk lies in not being overinvested or underinvested, but in the ability to manage risk through changing market cycles in an objective, repeatable fashion. A tactical overlay can provide a stable foundation via a process that limits downside exposure.

Relative Strength Rotation: The value-added concept of Relative Strength (RS) is utilized to identify intermediate and long-term themes of just performance, yet also remain responsive enough to rotate as market trends change. Relative Strength is adaptable across all asset classes and security types; stocks, bonds, real estate, commodities, and cash. Since RS is rules-based, it eliminates the subjective, often emotional trade.

TISR: Taxes, Inflation, Sequence Risk

Taxes – Taxes should always be considered when managing taxable accounts for high net worth investors. Besides the traditional use of municipal bonds where appropriate for risk reduction, the use of tax-loss-harvesting should also be employed to reduce capital gains in any given calendar year.

Inflation – Inflation is the number one threat to “purchasing power” as time passes. At an inflation rate of 3% per year, purchasing power is reduced by 50% every 24 years. This means that a $4.00 loaf of bread will cost $8.00 and a $30,000 car will cost $60,000 in 24 years. This phenomenon can be countered with proper growth within the portfolio to offset this mathematical certainty.

Sequence Risk – Sequence Risk is another mathematical factor that causes portfolio principal to be depleted as portfolio income is taken on a regular basis; for instance, at retirement. This condition also can be altered by growth in the portfolio along with a dividend structure for income distribution.