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Investment Disciplines

Our number one priority is to keep your clients out of trouble.

Outcomes Delivered by Discipline

Since 1987, our investment disciplines have sought to help investors limit downside risk and grow their wealth. Through the years, we have remained committed to our truly tactical, rules-based investment process. Using decades of strategic research and our rules-based disciplines, we provide solutions that can complement investment portfolios, and strive to help advisors and their clients meet their investment goals.

Every good investment manager should be able to answer the questions "When do you buy?", "What do you buy?", and "When do you sell?" For us, the answers to those questions form the foundation of a tactical approach that has served investors for more than 35 years.

Our Disciplined Process

Trend Following – Quantitative, Rules-based

Our truly tactical rules-based investment disciplines only buy when our decision rules show an uptrend has begun or is in progress. We don’t just look at share prices, but use exponential moving averages to help drive our decisions.

We buy only when our decision rules show an uptrend has begun or is in progress.
Once a given asset class | sector begins an uptrend that is adequate to generate a “Buy” signal under our proprietary discipline, we analyze all mutual funds and ETFs in that asset class | sector to determine which to buy.
“Buy” signals are quantitative – and the discipline is the contrary of our trailing stops for “Sell” signals.

We use an extra moving average for a Buy, because we want more evidence that a new uptrend may have started for us to put money into risk, than to take money out of risk (Sell signal).

Security Selection – The Most Complex Question

As part of our risk-mitigation discipline, we give preference to asset classes/sectors with low volatility. Our trailing stop bands will be tighter thus when the trend reverses from up to down, we give back less.
When there are multiple asset classes/sectors in uptrend, preference is given to those that are not highly correlated to each other, or the overall portfolio.

Trailing Stop-Loss – Quantitative, Rules-based

We treat a Sell signal as a mandate (we sell to prevent any possibility of further damage to the account). A “Sell” signal occurs when the price rises below the recent high of the lower band.

We monitor and review our trailing-stop-loss discipline daily for every holding.
When the price of a holding declines below the trailing-stop (lower band), we sell, and move temporarily to cash.
Our trailing-stops are completely quantitative and are proportionate to the historic volatility of each asset class/sector.
Our stop-loss discipline limits the impact of any sustained decline on the overall portfolio.

More About Buy & Sell Signals

Each holding has its own Trailing Stop under it, and our investment team reviews every holding every day.

When we Sell, the sale is based on each individual position, not the overall asset class.