MARKET ANALYSIS: Our first step in managing a portfolio is to analyze the overall market to determine if we should be in a wealth accumulation mode or a wealth preservation mode. This is a Big Picture view – the view from 30,000 feet. This top-down approach ensures we have an understanding of the overall market each business day.
SECTOR ANALYSIS: The second step in managing a portfolio is to analyze industry sectors to identify the leaders – the industry sectors which are outperforming the broad market. Sectors rotate in and out of favor just like the seasons. Relative strength studies point to the leaders.
FUNDAMENTAL ANALYSIS: In step three, we build our own inventory from fundamentally sound stocks based on our own proprietary criteria. We are independent advisors. We do not sell products and we are not tied to any other firm’s list of stocks, mutual funds or investment products.
TECHNICAL ANALYSIS: From our inventory of fundamentally sound stocks, we select those that are technically strong. Technical analysis is step 4. We follow the price action – supply and demand – with technical tools. We study relative strength comparing the particular stock or sector to the overall market and to its peer group. We want to identify the leaders.
RISK ANALYSIS: Step five is managing the risk in the portfolio. Continuous oversight of the stocks and funds in our portfolios is very important. We use a rules-based system to overcome emotion. Knowing ahead of time what you will do if a trade does not work the way you anticipate is extremely important. We identify exit prices at the time we buy, and we raise exit prices as trades are profitable. We are deliberate in determining the position-size of each trade to control the risk relative to the overall portfolio.
Disclosure: We do not guarantee the future performance of any account, or the success of any investment decision or strategy that the Adviser may use. Investment decisions are subject to market, currency, economic, political and business risks. Investment decisions may not be profitable and your account may be worth less than that invested including the loss of principal.