Home | Process

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, Rules-Based Investment Process

When We Buy: Trend Following

We buy when our quantitative decision rules identify an uptrend.
An uptrend is determined by a fund’s price rising above both the recent low of its upper band and a secondary intermediate-term moving average.
A fund’s bands are generally defined by its historic volatility and are offset above and below a short-term exponential moving average.

What We Buy: Security Selection

We seek to buy securities exhibiting the strongest risk-adjusted returns during the recent uptrend.
When there are multiple securities in uptrends, preference is given to those that are not highly correlated to each other or the overall portfolio.
Quantitative analysis is used to rank which securities to buy, including:
- annualized strength of the recent uptrend
- historic volatility
- recent correlation to existing holdings and major asset classes
- additional quantitative metrics

When We Sell: Trailing Stops

We monitor and review our trailing stop-loss discipline daily for every holding.
We will sell any portfolio holding and move temporarily to cash when our quantitative decision rules identify a downtrend.
A downtrend is determined by a fund’s price falling below the recent high of its lower band, otherwise known as its trailing stop.
Our trailing stop discipline applies to every fund holding and helps to limit the impact of further decline on the overall portfolio.

More About Buy & Sell Signals

We place a trailing stop under each holding. All of our investment managers convene every day to review every asset class and every holding.

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